Nevada County Picayune and Gurdon Times Newspaper Archive

Students Lack Knowledge Of Finance

If actions speak louder than words, then most American high school and college students don't know as much about personal finance as they think.

A nationwide survey of high school seniors measured their level of knowledge of personal finance. The study was sponsored by the Jump$tart Coalition for Personal Financial Literacy, a non-profit organization dedicated to improving the personal financial literacy of young adults.

The survey was conducted in February and March of this year and consisted of a written 45-minute examination administered to 723 seniors in public schools across the United States. The coalition wanted to see how well these young people were reaching the goal of having the skills to be financially competent upon graduation from high school.

One of the most troubling findings was that only 51.9 percent of the questions were answered correctly. Students who own a credit card scored worse (49.1 percent) than did teens who don't use a credit card (53.3 percent).

Only 46 percent of those taking the test knew that the retirement income paid by a company is called a pension. Fewer than 40 percent (38.3 percent) correctly answered that federal income tax would at least double if annual income grew from $15 thousand to $30 thousand. Students who own stocks in their own name achieved the same score on the survey as students who don't own stock (52.6 percent).

Parental involvement in teaching financial concepts to children did not have a great affect on scores. Students whose parents often discuss money matters in front of them scored only slightly better on the survey (52.6 percent) than did students whose parents sometimes (52.5 percent) or rarely (52.4 percent) discuss money matters in front of them. However, students whose parents never discuss money matters in front of them achieved a score of 42.5 percent.

Many of these same uninformed young people receive incredibly tempting credit card offers, yet they lack an understanding of basic financial obligations in accepting and using these cards, according to Wanda Shelby, family resource management specialist, Cooperative Extension Service, University of Arkansas.

Rather than just assuming that your children are picking up concepts of money management when you discuss financial issues in front of them, parents should make it a point to do some specific teaching about earnings, credit, savings and taxes so that their children will not have to learn these lessons on their own.

Economic ignorance can be expensive  for both you and your children. Begin teaching your children basic financial concepts early, then build on their money management experiences.

The Clark County Cooperative Extension office has information on how to best teach children and young people the financial skills they need now and for a lifetime. Contact them at 501 Clay Street in Arkadelphia or call 246-2281.