Future Generations Will Struggle with Finances Without Intervention, Purdue economic education expert says

11 Apr

Unless there’s some type of intervention, it’s likely future generations will continue to face the same financial struggles that many Americans experience today, according to an economic education expert at Purdue University.

It’s a gloomy forecast. Adults are now in more debt than they were during the recession about 10 years ago, and unprepared for retirement — or even a $400 emergency, according to a Federal Reserve Survey of Consumer Finances.

With April recognized as National Financial Literacy Month, it’s a good time to assess whether we’re doing an adequate job of teaching children about finances and money management, said Jeff Sanson, executive director of the Indiana Council for Economic Education (ICEE) at Purdue University’s Department of Agriculture Economics.

“If you want to thrive and survive in our economy, you need a level of financial literacy to enable you to make sound decisions as well as avoid becoming a victim of a financial mistake or misstep,” Sanson said. “You can mitigate many of those mistakes if you can put together a sound financial plan.”

Sanson said, it’s important to build a foundation early. “As soon as a kid knows to ask for something, even if it’s candy or a toy, you can start having conversations about finances,” he said. “It could be as simple as helping them understand that there is a limited amount of resources and how to prioritize what they want. Maybe they want two things. Help them understand the importance of making choices.”

As part of ICEE, Sanson assists teachers throughout Indiana with economic education programs designed to reach K-12 students. Each year, ICEE offers workshops for teachers as well as provides innovative ways for them to help students learn economics, personal finance and entrepreneurship.

The organization also hosts economic camps for teachers and students, economic competitions for students, and hands-on games and lesson plans for classrooms.

One of its most recent initiatives is an app that helps elementary school students learn economics and entrepreneurship through scenarios guided by Herschel, a feisty puppet dog who still has a lot to learn when it comes to money matters. The app is part of the KidsEcon Project, a series of DVDs, books, teaching guides available through ICEE.

“We don’t talk about money matters enough with kids,” Sanson said. “There’s clear evidence that financial literacy and economic literacy are marginalized because of other instructional mandates.

“However, financial literacy is critical. Students need to understand the importance of how a college education or other training beyond high school can help them get into specific careers, as well as the importance of managing the funds they earn,” he added.

Sanson noted that those lessons can be difficult to teach in an engaging and relevant way for kids. He said many teachers often lack the resources required to support those programs in the classroom, while many parents and caregivers consider those types of conversations tough because of their own issues with finances.

“It’s a very personal subject,” said Sanson, pointing to one study that revealed that even teachers have reported being uncomfortable with their own financial literacy even though they were required to teach it.

“Americans, in general, struggle with this topic,” he said. “I think people struggle with talking about money because they’re not comfortable with their own level of knowledge. They may not be making the best spending decisions so there’s reticence in starting those conversations.”

He also noted that families tend to be private about their income or how they’re doing financially. Even with that, parents can have discussions that can help their children understand income is not unlimited.

“Parents are constantly making choices for the family,” he noted. “Include children in those conversations. Have a monthly meeting in which you’re discussing the budget for the household — outlining short-, medium- and long-term goals.”

Those conversations can include plans for a summer vacation, and the ways that the family can cut expenses elsewhere to make the vacation a reality, Sanson said. Those same lessons could apply for a household item like a big-screen television. “Demonstrate good examples for kids to follow without weighing them down with discussions on how they’re going to be short on bills this month.”

In Indiana, personal finance instruction, which includes the topics of earning income, savings, budgeting, money management, insurance, credit and borrowing, has been mandatory for middle school and high school students since 2009.

However, Sanson points out, “while about half the schools go as far as to require students to take the personal finance course, there is no state course requirement.”  According to the national Council for Economic Education’s 2016 Survey of the States, only 17 states require students to take a personal finance course prior to graduation.

“No one is saying it’s not important,” Sanson added. “It’s just not at the top of the priority list.”

Educational support materials, including assessments, guides, curriculum, and apps, are available through ICEE at www.econed-in.org/resources.asp.

Source: Jeff Sanson, jjsanson@purdue.edu, (765) 494-0188

Writer: Shari Finnell, sfinnell@purdue.edu, (765) 494-2722

Agricultural Communications: (765) 494-8415;
Shari Finnell, Manager/Media Relations and Public Information, sfinnell@purdue.edu
Agriculture News Page

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