The Financial Education of Our Youth

newshomie's picture

by Heberto M. Sanchez

   The financial crisis of 2008 is but a memory to most consumers and many voters. Yet to those who still remember, it is a painful memory of what happens when greed takes hold and the public is uneducated in finances. Since 2008, we have seen legislation and programs at the national and state levels intended to improve financial literacy for both adults and young students.

   President Obama proclaimed April 2015 as National Financial Capability Month, and in 2011 Congress established United States Consumer Financial Protection Bureau (CFPB) to protect and educate consumers. As gallant as these efforts are, they and various other initiatives are still accessed by only a few people, and even fewer minorities. This is due to the fact that financial literacy classes, especially those aimed at students, are abstract and provide little to no practical concept to support responsibility for one's own finances. There are indeed some well conceived programs that establish bank accounts for students to teach them how to balance their check books, which is an encouraging first step. That is not enough, however, as the core principals of finance, lending and borrowing, are missing. Financial literacy, directed to students, should be thought using practical financial applications.

   Teaching students about personal finances is only part of the battle. The next step is teaching them how to start and run their own businesses. In addition to financial literacy classes, schools and organizations should consider linking those financial literacy lessons with entrepreneur or small business courses. The goal would be to teach students how to start their own businesses (i.e. how to write a business plan, how to get a loan, how to manage employees, etc). Many of these small business courses are available through the US Small Business Administration and community colleges, and could be designed for middle and high school curriculums as well.

   Innovative ideas are what is needed. Schools should be encouraged to think outside of the box. Schools should consider starting student loan boards on campus. These boards would be managed by students, similar to the associated student body, and would administer funds through loans to school programs. These loans would help supplement athletic programs, clubs, or student projects such as snacks delivery during final exam times, car wash services, etc. These loans are then repaid with interest by the programs activities fundraising efforts. The money earned would be recycled back to these programs each year from the repayments plus interest. The goal would be to allow students to receive hands-on experience on how the loan process works from the standpoint of banks and loaning agencies. The Student Loan Board format is currently being applied locally here in Los Angeles.

   Just as education is a high priority, so should the financial education of our youth be our priority. Although many people still consider personal finances a private matter to be taught by parents, the subprime mortgage crisis showed us that even parents may need a lesson in finances. Our children need to know how money is created and how it works if they are going to have a chance at living the “American Dream.” Until schools incorporate practical financial literacy and entrepreneur courses into their curriculum (teaching practical finance strategies and monetary policy), we run the risk of experiencing a far larger financial crisis. This is especially true when related to student debt repayment default, which may lead to fewer small businesses due to students not having the credit score or funding to start a business due to their student debt.

Heberto M. Sanchez is the Founder and President of the Latino Educational Fund, a 501c3 nonprofit organization founded to help Latino students improve their lives.

Rate this article: 
5
Average: 5 (1 vote)
Opinion