Today’s youth are bombarded with a multitude of financial options and responsibilities at an increasingly young age. One out of every three teenagers has a credit card, and even more have an ATM card. Yet many are ill-equipped to make informed decisions about financial matters.
They don’t understand fundamental principles of money management and the larger economy. As a result, teenagers are at a disadvantage when making important first financial decisions: buying a car, taking part or full-time employment, and using credit cards.
This is why I’ve filed legislation this year, An Act Relative to Financial Literacy in Schools (S2014), that would require that personal financial literacy be integrated into existing Math frameworks for all schools in the Commonwealth.
The curriculum would include information on loans, borrowing money, interest, credit card debt, online commerce, rights and responsibilities of renting or buying a home, saving, investing and planning for retirement, and banking and financial services.
That bill was heard by the Joint Committee on Education earlier today, and I testified today to ask the committee to give the bill a favorable report. This bill, which was originally sponsored by State Senator Susan Tucker, was passed – unanimously – by the Senate last session. Our hope this year is to pass it in both the Senate and the House, and get it to the Governor’s desk for his signature.
Financial education bills have the support of Treasurer Steven Grossman. Treasurer Grossman has done an excellent job articulating the vision that financial literacy for all citizens is important because we should all be savers and safe investors and responsible financial citizens are a benefit to the Commonwealth.
Financial literacy isn’t just a matter of education policy, however – it’s also an important anti-poverty tool to help low- and moderate-income families move up the economic ladder.
In June of 2009 the Asset Development Commission released a report to examine what it meant to be low-to-moderate income in the Commonwealth of Massachusetts, what help the state provides families in achieving economic stability, and what barriers are standing in their way. I was proud to serve as Co-Chair of that commission.
The commission found that financial education is particularly important for low and moderate-income families, for whom the challenge of navigating the increasingly complex financial services world is even more difficult than for other families. Ultimately, the commission recommended that the Commonwealth implement financial education in schools to better prepare youth, particularly those who are low-income, for the financial decisions of the future.
By teaching children the financial education basics in school, we will help them make educated financial decisions in the future, preventing future bankruptcies, foreclosures, and unmanageable debt.
This is a result that’s good for society as well as for individuals. Over the long term, the investment we make in teaching children financial literacy now will help strengthen our economy and prevent future economic crises.