Financial Education: 4 Signs We're Failing

The results are in from the second annual National Financial Capability Challenge (given to kids ages 13-19), and they are anything but inspiring:

• The average score dipped to 69% from 70%.
• The portion of students earning a perfect score dipped to .67% from .68%.
• Student participation rose by less than 10%, which was well short of the 15% goal.
• The number of educators taking part inched higher by a whopping two teachers -- to 2,517, an abysmal result given that the number of schools participating was up more than 10%. Many teachers, rather than encouraging colleagues to join the mission (as was hoped), didn't even re-up themselves.

The best possible reading of these numbers is that, on the whole, things are little changed from a year ago. We didn't lose ground. But that's putting lipstick on a pig. The push for financial education in the states and many other countries has never been more visible. This movement has the attention of the President, Congress, the financial community, entrepreneurs, scores of nonprofits and a small but dedicated number of school officials.

The Great Recession, in particular, has given momentum to this cause. In the economic pullback millions of people lost their homes or jobs or life savings or had no emergency funds to see them through the difficult period. What had been a fairly quiet push for financial education, not just in schools but also in communities and the workplace, has blossomed in the past few years into a full-throated mission. You would think that participation rates in this kind of program would soar, even if the scores do not.

The Challenge is a high-profile attempt to redouble the battle against financial illiteracy by enlisting educators on a voluntary basis. The Challenge is sponsored by the U.S. Treasury Department and widely championed in financial circles. It takes about 30 minutes to complete and tests students on their knowledge of budgets, credit, savings investing and the like.

The disappointing numbers from this year's Challenge are in line with other gauges of student knowledge when it comes to personal finance. The JumpStart Coalition for Personal Financial Literacy has tested students since the late 1990s, and the lowest scores were recorded in its latest test in 2008. The JumpStart test is now in redesign; the next round of testing is scheduled for fall.

Photo courtesy Flickr user seeveeaar.
More on MoneyWatch:
· 3 Reasons 21 Nations Teach Kids About money
· 3 Steps to Teach School Kids About Money
· Financial Education: How We Got Here
· Financial Education: How We're Missing the Boat
· Financial Education at School: Is It a Pipe Dream?
· Taking Financial Education to the Next Level

Dan Kadlec

Daniel J. Kadlec is an author and journalist whose work appears regularly in Time and Money magazines. He is the former editor of Time’s Generations section, which was written and edited for boomers. Kadlec came to Time from USA Today, where he was the creator and author of the daily column Street Talk, which anchored the newspaper's business coverage. He has co-written three books, including, most recently, With Purpose: Going from Success to Significance in Work and Life. He has won a New York Press Club award and a National Headliner Award for columns on the economy and investing.

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