We introduced the subject of financial literacy yesterday.   Today, we’ll talk about concrete steps we need to take to ensure the next generation has a firm grasp on finances and money.

Not teaching our kids about financial literacy is one of the prime reasons millennials have accumulated more than $ 1 trillion in debt- the highest ever for this age bracket (18 to 29) in more than a decade.  (It IS the highest ever, but, when considering inflation, we can see that right before the bank failures, debt by that age range had also escalated.)

And, this deficit hs been growing faster each successive year since 2007.   (Don’t be too smug you older folks;  24% of the next generation (ages 30 to 39) have increased their credit card debt, compared to just 11% for those over 40 (and less than 59) years of age.)

I do admit that a good portion of this skyrocketing debt load is associated with student loans.  Student loans comprise almost 40% [38%, is the exact number] of all debt load carried by those under the age of 40.

This problem is why, like my pal Andy, the Jump$tart Coalition for Financial Literacy wants to educate our school age kids.  This coalition of some 100 local groups (and 50 state coalitions) wants to increase the number of students developing financial literacy by at least 25% over the next 5 years. And, they don’t want just a one-off (a single event, or one hour of lecture)- no, they want the minimum program to involve some 70 hours of instruction.

I first wrote about this coalition more than 5 years ago and it still struggling to achieve its goals.  So, I was pleased to see that the Superintendent of the DC Public Schools is joining the bandwagon.

She (Christina Grant) has proposed a set of financial literacy standards for the city’s high school students.  They will now learn about budgeting, saving, and investing. Data indicate that those that undergo such instruction have lower loan default rates and higher credit score.  (Note:  This program is  using guidance from JumpStart as well as the Council for Economic Education.)  These are the primary facets of the program.

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Budgeting and Spending

This critical issue will hep the student make informed buying decisions.  Budgeting to ensure that they have money at the end of their month. (Too many have month left after the end of their money)  Medical care, housing, access to goods and services that have economic, political, and geographic factors will be investigated.

Investing

Not only will stock purchases and sales be discussed, but the need for companies to issue stock will be covered.  But, investments is more than stock- saving for retirement and their management will also be discussed.

Saving

The various different saving account vehicles will be examined.  This will lead to an examination of generational wealth- and how that affects the direction of one’s life.  Inflation, deflation affects will be included, as long as other financial risks associated with savings accounts, stock trading application, as well as cryptocurrency will be covered.

Credit

Knowing how borrowing money and using credit cards is a vital component of financial literacy.  Interest rates, down payments, credit scores- all of these will be included. Student loans- the various types- will also be part of this section. Payday loans, instant tax refunds, and check cashing services will be examined for their risks and when they may still make economic sense.

Risk and Insurance

Types of insurance and the factors that determine premiums (co-payments, deductibles) are the last component of the program. How to determine the right insurance program, as well as private and public (government) insurance programs will also be discussed.