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Financial Literacy Vital to Students’ Education and Success (Kay Ivey)

  |   By: Kay Ivey     |   Letters to the Editor

Growing up in rural Alabama, my parents instilled in me a strong work ethic. They taught me the value of a dollar and that hard work garners rewards. That message was reinforced when I attended Auburn University where our creed states, “I believe that this is a practical world and that I can count only on what I earn. Therefore, I believe in work, hard work.” This continuing theme directed my life.

Before I entered public service in elected office, I had a career as a high school teacher and banker. I had a passion for educating students about the same lessons I’d learned growing up. I approached one of the executives at Merchants National Bank in Mobile about my idea to take financial literacy classes into the schools and he practically shooed me out of his office. I persisted and eventually he hired me to direct an economic education program for students. I knew it was important then, as I know now, for schools to teach students the important life skill of personal finance. I believe financial insecurity is one of the greatest threats facing our nation today.

As State Treasurer, I spoke to dozens of high school groups and taught them the 10-30-30-30 plan. Tithe the first 10%, save 30% for long-term, put aside 30% for short-term, and use 30% for expenses. For many students, my formula may have been all they learned about personal finance while in high school. Unfortunately, it’s an area where education systems nationwide have fallen short.

The facts from a recent study by the Council for Economic Education are concerning.

  • Only 56% of teens plan to save some of their income, down from 89% in 2011
  • 81% of college students underestimate how long it’ll take them to pay off a credit card balance
  • In 2010, more individuals filed for bankruptcy than graduated from college
  • Among Millenials (ages 18-34), only ⅓ have an emergency fund yet 31% have unpaid medical bills and nearly half carry a balance on their credit card

Only 19 states require a personal finance course in high school even though 89% of individuals believe financial education should be taught in schools. The good news for Alabama is we are now one of the 19 states. As of this year, every Alabama ninth grader will take a course in personal finance. I applaud the Department of Education for addressing this need.

It is not too late to turn the boat around for younger students. However, in the next month, thousands of Alabama high school seniors will don caps and gowns and walk across a stage to their future. Some will enter the workforce upon graduation after completing career ready courses in school, others may attend 2-year technical institutions, and many will go to college. I share the excitement of our high school seniors and their families as they celebrate a major accomplishment and look forward to a new chapter. But as students turn the page, I urge them to pause and plan for their financial futures as well.

Follow Kay on Twitter at @LtGovIvey

Kay Ivey currently serves as the Lieutenant Governor of Alabama.