Private Funding Fills Public Budget Void in Financial Literacy

The fact that states are lagging in educating students about financial and money management matters comes as no surprise when teenagers exhibit consumption of $100 billion annually, but relatively few young people report having any meaningful savings for a college education or for their futures.  Financial education studies routinely show that less than one-third of young people possess a basic understanding of budgeting, saving, inflation, interest rates, credit, debt and other key financial concepts.

The financial literacy crisis among young adults was further exacerbated by the recent recession and continued market and economic uncertainty, which has caused higher rates of unemployment and troubles in the mortgage and housing markets.  Moreover, the sluggish economy also sparked cutbacks in state budgets, resulting in fewer efforts to fund financial education programs and initiatives.

While some states, such as Virginia, Tennessee, Missouri and Utah, have implemented a requirement for students to complete a personal finance course in order to graduate, and while some states require students to take classes in which personal finance topics are covered, financial literacy professionals are struggling with a noticeable slowdown in legislative efforts among states to implement more aggressively financial education programs that could better position students for improved financial planning and security on a long-term basis.

What can be done to thwart this widening crisis?

As is often the case with addressing economic, social and other major problems amid reductions in public funding, the private sector can be an important force in filling the void.  This has been the case in the financial literacy space as well.  Some examples are noteworthy:

• PricewaterhouseCoopers pledged $60 million to fund a range of financial literacy efforts targeting teachers and school-aged young people.

• Discover pledged $10 million to fund high schools that roll out financial education curricula.

• MasterCard has implemented a global effort to fund financial literacy initiatives in areas where public funding of such programs is scarce, including partnerships with Junior Achievement, the Grameen Foundation, NFTE and other entities to foster the growth of financial education efforts.

• Visa has invested heavily in financial education programs for students, including through a partnership with the National Football League in which NFL players educate students about financial concepts and teach them how to make better informed financial decisions.

The above represent only a few of the many investments being made by the private sector to address the major financial literacy crisis amid certain reductions in government spending that otherwise could be earmarked for financial education.  As such private funding and support for financial literacy continues to rise, this trend should bode well for more robust financial education initiatives in the months and years ahead.