Finding a (Checkbook) Balance

In a state that ranks fourth in the nation in bankruptcies and saw its mortgage foreclosure rate soar nearly 38 percent from 2002 to 2006, the majority of Hoosier kids (59.4 percent) say they learn how to manage money at home. And, roughly that same percentage of Hoosier kids fails a test on basic money management skills. That's according to research reported in a new Issue Alert from the Indiana Youth Institute (IYI), "From Birth to Bankruptcy: Teaching dollars and sense to Hoosier kids." Funding for the Issue Alert was made possible in part by Crowe Chizek and Company LLC. Not only do six in 10 Indiana high school students fail to correctly answer questions about balancing a checkbook or how to earn, spend, save and invest on the National Jump$tartCoalition's financial literacy survey, but three in 10 earned only a "C" or "D" and none earned an "A." There is help for Hoosier parents who want to instill better money management skills in their children, said Bill Stanczykiewicz, IYI's president and CEO. "Indiana's high rates of bankruptcy and foreclosure are bad news now and even worse news later since a majority of Indiana youth say they learn most of their money management skills from family members," said Bill Stanczykiewicz, president and CEO of the Indiana Youth Institute. "Fortunately, parents, teachers and youth workers can utilize several practical programs and resources - most of which are free - for teaching Hoosier kids how to become financially responsible." "Without learning the basics at home, Hoosier kids will not develop the confidence they need make good decisions about advanced financial issues, such as investing, managing credit or buying insurance," Stanczykiewicz added. Jump$tart reports that few Indiana high school seniors have hands-on budgeting experience. Of those surveyed: -61 percent do not have checking accounts -64 percent do not receive a regular allowance, and -50 percent have their own cars but do not help pay for insurance. While financing a college degree with debt can be a sound investment for the future of many students, Stanczykiewicz added, the Issue Alert sounds a note of caution for Hoosier students and their parents. The research shows that some students will seek additional forms of credit to pay for a degree, and that the freshman year is when about 56 percent of students receive their first credit card. The Issue Alert shows a higher percentage of college-age students in the Midwest not only use credit cards, but also carry more cards, higher average credit card debt and are more likely to have balances between $3,000 and $7,000 than their peers nationally. Finally, a lack of knowledge about finances is directly related to an individual's level of credit card debt, and many students express unrealistic optimism that they will pay off their debts once they complete school. "We can't let Hoosier kids live on a timeline that includes a stretch from birth to bankruptcy," Stanczykiewicz said. "This Issue Alert provides a wealth of practical information about efforts going on in public schools and a list of resources parents and other caring adults can use to teach these valuable lessons outside the classroom." The Indiana Department of Education has developed a curriculum for inclusion in middle school work that is based on recommendations from the Jump$tart Coalition. The goal is for every student to meet the standards and pass an assessment before leaving the eighth grade. Among the financial literacy resources listed in the Issue Alert are games, books, Web sites, programs and practical exercises, many broken down by age groups to help parents and other caring adults work with children at various stages in their development. In addition, entities such as the Indiana Council for Economic Education, Junior Achievement, the American Institute of Certified Public Accountants and the Indiana CPA Society are involved in efforts to promote financial literacy. Copies of IYI's Issue Alert, "From Birth to Bankruptcy: Teaching dollars and sense to Hoosier kids," are available free of charge by calling the Indiana Youth Institute at (800) 343-7060. The report is also available at IYI's Web site, http://www.iyi.org/resources/doc/Issue-Alert-FINANCIAL-LITERACY-Spring-08.pdf. The Indiana Youth Institute promotes the healthy development of children and youth by serving the institutions and people of Indiana who work on their behalf.