Meeting the demand for financial literacy
- August 17, 2012
The 30-something young lady came to my office for a brief lesson on investing. My first question: Do you know what a CD is? And not that little round disc that you put in a player. She shook her head.
A lot of the students in my accounting class have never written a check. Forget reconciling a bank account. The bank balance on the receipt is correct, right?
Another client wanted to buy a house. She couldn’t figure out how people ever came up with the money. A mortgage? She had never heard of it.
And we expect everyone to save for their own retirement, use credit wisely and manage their money. How do we get there from here?
Fortunately for Virginia students now are required to take a one-credit course in economics and personal finance for high school graduation. The requirement became effective for those entering ninth grade last fall.
It was a long time coming. The Virginia Jump$tart Coalition for Personal Financial Literacy was established in April 2005 as an affiliate of the national organization. Among its more than 120 members are credit unions, government agencies, nonprofits, financial planning groups and educational institutions. Leading the effort to create the group was the Virginia Society of CPAs (VSCPA), of which I am a member.
The VSCPA has been pressing the issue of financial literacy since 2004. In 2005, the General Assembly approved a bill to require instruction in the topic. In 2008, Chesapeake Del. Lionell Spruill Sr. introduced legislation to make the course a graduation requirement, but the bill failed to make it out of committee. The Virginia Board of Education (VBOE) did what the legislature would not. In February 2009, it revised its Standards of Accreditation, making the course a graduation requirement. Then-Gov. Tim Kaine approved the regulatory changes.
Initially, the requirement was to take effect in the 2010–2011 school year but legislation in the 2010 General Assembly session delayed its implementation one year. Attempts to delay it again during the 2011 legislative session were met with an outcry from the Coalition and members of the VSCPA. It helped that Gov. Bob McDonnell expressed his support for the requirement as well. He signed a bill in March 2011, thereby protecting this important course.
The elements included in the Standards of Learning (SOL) for Economics and Personal Finance are comprehensive. In addition to basic economic concepts of supply and demand, it covers such things as consumer skills, like comparison shopping; planning for living and leisure, such as buying a home; and banking transactions, such as reconciling bank statements; and credit. Also included is information on the role of government and the global economy. The entire SOL can be viewed on the VBOE website.
The VBOE has developed free resources for school boards to use in implementing this requirement, including an online course. Resources are also provided to help teachers prepare to cover all of the topics. At this time, there is no plan to have an SOL test on economics and personal finance.
In 2011, the VSCPA teamed up with the Virginia Council on Economic Education (VCEE) to offer a course for educators tasked with teaching students the required material. Called Personal Finance Institute, the course is designed for teachers who want to deepen their knowledge of personal finance topics including banking, credit, consumer rights and responsibilities, insurance, taxes and financial planning.
VSCPA members volunteered to teach the course. One instructor, Ryan Losi, CPA said that because finances touch every aspect of our world — from paying for college to budgeting for insurance and a home — leaving money management out of public education is really doing a disservice to our children.
Teachers who participated in the Personal Finance Institute agree. While some were hesitant at first, they said digging in not only influenced how they would approach students but also their own personal finances.
“Many beliefs I held were challenged; others were validated,” said one teacher from Fairfax County.
Another teacher from Portsmouth stated she knew the graduation requirement would help the younger generation to avoid financial mistakes and benefit the economy in the future. Similarly, a Prince George County teacher stated, “Children are the best investments for the future. Not investing in our future leaves us all in a state of despair with no hope for the future.”
Virginia §22.1–200.03 cites as its goal of economic education and financial literacy to “further the development of knowledge, skills and attitudes needed for responsible citizenship in a constitutional democracy.” It is a laudable goal — and one I am glad they have added.
Vivian Paige, MBA, CPA, CGMA, is the president of Vivian J. Paige, CPA, PC, an accounting firm she established in Norfolk in 1986. In addition, she is an instructor of accounting at Old Dominion University, where she earned both her undergraduate and graduate degrees.