Oakland Tribune Article

Financial knowledge key to future

By Barbara Grady, Oakland Tribune

download original article (pdf)

Today’s teenagers have more money at their disposal than did prior generations of teenagers. A survey by financial firms reveals that spending by this age demographic averages $58 a week. According to a study by JumpStart Coalition, by the time they are seniors in high school, nearly a third of teenagers use a credit card. By college, that percentage jumps to 83% of students and their average outstanding credit card balance is $2,327.

Besieged by advertisements and active users of the Internet—where the only way to buy things is with a credit card—today’s teenagers are vulnerable to financial missteps. Think it may be a good idea to make sure today’s teenagers know something about money—about budgeting, the cost of credit, interest rates and saving? Alan Greenspan, former Chairman of the Federal Reserve, does; he says that gaining “financial literacy” in elementary and high school can “help prevent young people from making poor decisions that may take years to overcome.”

Indeed, the fastest growing demographic group declaring personal bankruptcy is people aged 20 to 24, according to Coinstar Inc. Yet research groups also say that most teenagers admit they don’t know much about finance and their parents haven’t taught them about managing money. A large survey of teens and their parents by Capital One, a major credit card issuer, and Consumer Action found that only 44% of teens said their parents taught them about money management while 70% of parents believed they had done so.

And rarely is financial education incorporated into scholastic curricula. Thirteen year old Natalie Boskin, who lives in Albany, may be one of the lucky ones. Her parents opened a savings account for her and she has come to understand the concept of saving money for future reward. Boskin saves the majority of her allowance, taking out only a certain percentage each week for spending. When asked what she is saving for, she says college. But her inclination to save is rare among her peer group. Boskin said, “I found I’m a much better saver than my friends. If they get $20 it is gone by the end of the week. My friends—the ones that spend a lot—have more money in the bank than I do. I think their parents put it there for them. But that is not teaching their child how to save.”

Several national and local organizations have sprung up to help teach adolescents about finances—about balancing checking accounts, about how compound interest rates help grow both debt and savings, and how debt obligations can affect credit scores.

The JumpStart Coalition, in Washington D.C., is the largest organization advocating for youth financial literacy. It has developed a curriculum for use by schools or nonprofit organizations such as scout troops. It’s Web site states that “Many young people fail in the management of their first consumer credit experience, establish bad financial habits and stumble through their lives learning by trial and error.” A survey of high school seniors found that, the 32% who use credit cards are slightly less likely than non-credit card users to understand how interest rates work and the mechanics of compound debt.

Locally, Alameda resident Bryan Medlin is one who took up the charge of teaching youth about personal finance. A California Maritime Academy college graduate, Medlin was appalled at the financial troubles his classmates accumulated. Medlin, who decided to build a business around teaching young people about money management, established a Web site, www.money-101.com, for this purpose. Recently, he has become a guest lecturer at Bay Area high schools, middle schools, and nonprofit organizations.

“It’s preemptive education. Certainly, without the benefit of personal finance training, a lot of young adults will make costly economic mistakes. Their parents don’t always teach them,” Medlin explained. He said that some amount of teaching about money is appropriate at each age, “To parents, I would recommend integrating practical financial education into conversation as early as 6 or 7 years old, the difference between coins and paper money and their respective equivalences should be taught. By the time parents are ready to give their kids an allowance, it makes sense to talk to their kids about budgeting. Many young adults spend money frivolously and, after a week, usually have no idea where their cash went. By tracking personal spending—which can be easily done using a computer and personal finance software—and planning expenditures within a semi-rigid framework instills financial discipline that will benefit them for years to come. By the time they reach high school and college age, young people should understand the time value of money, such as how stocks and bonds work and how to evaluate and select investments that will help them accumulate wealth in tax advantaged retirement accounts. Given average stock market returns over a multi-decade period, young people need only save a small amount of money to become millionaires at age 65. That’s a powerful message.”

Business writer Barbara Grady can be reached at (510) 208-6427 or bgrady@angnewspapers.com


  1. Can’t agree more that high schools should be teaching the practical ins and outs of personal finance. After all, what good is studying hard for that high-paying job if you don’t know how to manage your money?

    • bpmedlin says

      Well said. Big-picture, our educational system hasn’t evolved to adequately prepare young people for the demands of today’s world.

      Bill Gates rightly warns, “America’s high schools are obsolete. By obsolete, I don’t just mean that our high schools are broken, flawed, and under-funded… By obsolete, I mean that our high schools—even when they’re working exactly as designed—cannot teach our kids what they need to know today… This is not an accident or a flaw in the system; it is the system.”

Speak Your Mind