Building an Education in Personal Finance

Erie FCU incorporates their personal financial education curriculum with youth accounts to yield promising results.

 
 

“By teaching the basics of finance at an early age, we hope to create a solid foundation of smart money management. This in turn would have a positive effect by introducing youth – and all members of our community – to the benefits of saving early, spending wisely and using credit prudently. If we can give our young people the tools and resources they need to learn this, we can develop a relationship of trust—to come to our credit union for all their savings and loan needs.”– Sandi Carangi, VP Business Development, Erie FCU

In the Beginning…

Teachmeaboutmoney.org, a personal financial education website hosted by Erie FCU, was created in conjunction with the ongoing youth education efforts. The website was constructed and is maintained by Erie, but has been fueled by an ongoing relationships with several partners: BizKid$, Junior Achievement, Newspapers in Education, Penn State Erie, and the United Way of Erie. Newspapers in Education is sponsored by Erie, Penn State, and the United Way; it serves as one of the primary drivers of the online and in-classroom curriculum. BizKid$ is a personal financial educational video series produced by Junior Achievement and underwritten by America’s Credit Unions ; Erie purchases DVDs from BizKid$ to supplement their educational program.

Over the past two years, Sandi Carangi has been coordinating and teaching personal finance in elementary schools up through high schools and colleges, and even work places. While meeting with local teachers, she learned that there was a demand for a centralized resource, like archived copies of Newspapers in Education. The first iteration of teachmeaboutmoney.org focused on simply listing resources for teachers, but has since evolved to focus on all individuals.

Process

Teachmeaboutmoney.org can work as a standalone resource; it contains more than enough information to serve this purpose. A young Gen Y’er may navigate the site, make use of the lessons, activities, printable worksheets, and external resources like BizKid$. It may also be used as a tool for educators. Teachers regularly visit the site to review back issues of Newspapers in Education, print out activities, or reference the education pages for various age groups. Educators from Erie use the site as the primary resource for preparing their classes.

Erie has created two youth saving accounts at their credit union: the Treasure Club Kid’s Account and the Teen Saving Account. The Treasure Club Kid’s Account is for children under 13 and offers a small reward to children every time they deposit $10 or more into their savings account. The Teen Saving Accounts begins with a $5 deposit to open an account and offers online tutorials to help students navigate the world of finance. Coupons for $5, to open a new savings account, are distributed to students during classes taught by Erie at local schools.

ROI

Sandi explains, “We expected that the effects of our efforts would not be seen for many years. We believe that financial education is a lifelong process.” When launching long term projects similar to Erie’s, credit unions should be prepared to not see immediate returns.

However, Erie has seen youth membership grow by 3% over 2008 through their youth promotional accounts as tracked by the student coupon. This is a promising sign when compared to the 1.58% average membership growth rate for the industry. As they continue to incorporate teachmeaboutmoney.org, classroom and workplace education programs, and youth accounts, they expect to see increasing positive results.

TEENS

Many educators responsible for teaching personal finance head straight for a reliable stand-by: budgeting. However, they neglect to start with a critical income/spending baseline. How could students create personal budgets, if they don’t first know where their money is going? This is Lesson Number One from Erie FCU: students must keep track of all that they earn and all that they spend every week.

It’s easy to dismiss the sheer simplicity of this exercise, but let me relate this assignment to one I received while in middle school. My science teacher told everyone in the class to carry a trash bag every day, and each time they threw something away, to put it in their trash bag. Then we weighed the amount of trash we produced in the course of one week. From there, we launched into our next unit on recycling.

Tediously keeping account of a particular aspect of my behavior over the course of a week helped me acquire a basic, yet tangible, understanding of my actions. After weekly spending habits are examined, Erie launches into a set of lessons: Time Value of Money, Debit Credit Cards, and Buying a Vehicle.

YOUNG ADULTS

This is the first rotating factoid to appear underneath the “Did you know?” Post-it on the Young Adults portion of the Erie site. So, it is appropriate that the first lesson for a young Gen Y adult is obtaining college financing.

The credit union’s website Teachmeaboutmoney. org breaks down college loan options into three categories: parent, federal, and other. Many parents choose to take out loans on behalf of their college-bound Gen Y’er, including Federal PLUS Loans, private parent loans, and college-sponsored loans. PLUS loans are the most common source of parent loans, but those who are able to find colleges that sponsor loans may find the rates to be slightly better. The federal loan route leads to Perkins and Stafford loans to those who qualify, and alert students to PLUS loans for graduates. Finally, students may pursue the other loans, taking out private or college-sponsored loans in their own name. The website provides analysis as to which is right for the student.

ADULTS

If we call anyone over 24 an “adult,” and anyone between 13 and 30 a “Gen Year,” a comprehensive Gen Y education plan needs to consider issues that affect these adults. Although older Gen Y’ers are settling down, education is still important at this transitional stage in our lives. Topics for adults include Identity Theft, More on Credit, Budgeting, and Insurance Basics, Planning for Retirement, and– of course– Buying a Home.

TEACHERS

Teachmeaboutmoney.org started as a resource for teachers. Through their partnership with Newspapers in Education (NIE), Erie maintains an archive of past editions. NIE comes in sets of two, a paper for students and a lesson plan for teachers.

For example, the November 21, 2008, edition of Invest in Your Future, the student side of the NIE, challenges students with this scenario: “Now imagine you have two job offers. One is in Pittsburgh; with a yearly salary of $40,000. The other is in New York City, with a yearly salary of $60,000. Which should you take?” The lesson plan prompts teachers to introduce students to variations in the cost of living. Rent in Pittsburg costs $758.33 versus $5,363.51 in New York. Goods and services such as doctors, pizza, movies, toothpaste, and other day-to-day needs are consistently cheaper in Pittsburg as well.

 

 

 

Aug. 3, 2009


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