Will the Pandemic Teach American Kids Financial Literacy?
WHY YOU SHOULD CARE
A growing set of financial literacy initiatives is teaching school-age kids and college students about everything from budgeting to banking, amid a pandemic that has underscored the value of every dollar earned by families.
By Andrew Hirschfeld
- With more than 22 million jobs lost in the pandemic, American families are recognizing the value of teaching financial literacy to their children early.
- A growing number of initiatives, from Detroit to Denver, are emerging to tap into this demand.
More than 22 million Americans lost their jobs during the COVID-19 pandemic, with only some regaining employment since. Many of those who were let go are parents facing a daunting challenge: how to teach their kids the value of a dollar when their existing finances are stretched thin.
Now a growing set of financial literacy initiatives aimed at school-age kids and college students is tapping into that demand, a need underscored by the current crisis but also simply by statistics. According to the National Foundation for Credit Counseling (NFCC), 78 percent of American adults admit they would benefit from financial advice, signaling a massive financial literacy shortfall that they want to address early in their children.
These programs aren’t your run-of-the-mill supplementary-education efforts. Take Financial Garden in Detroit, which plans to teach 10,000 kids about financial literacy before the end of 2020. A social mobility tool aimed at lifting up socioeconomically disadvantaged communities, this program targets students from kindergarten through 12th grade and offers modules in areas ranging from investment basics to budgeting and banking. Financial Garden also teaches kids how to start their own businesses and be financially sustainable using their talents and passions as a springboard.
There is more interest from parents teaching their kids about money because they lost their job.
Tasha Danielle, Financial Garden
In Denver, an app called Mini Money Management, launched in March, allows parents to teach students about how to allocate money. Parents who use the app can pay their kids through the app for certain chores and fine them for, say, fighting with their siblings. And in New York, A Chance in Life, an after-school program, will teach students to come up with their own self-sustaining government and operate an independent city complete with courts, assemblies and even its own currency. To start, the program will work with between 200 and 300 children in Staten Island when it launches in spring of 2021.
For those behind these initiatives, the timing couldn’t be better: Amid the pandemic, they’re seeing a surge in interest.
“There is more interest from parents teaching their kids about money because they lost their job or they are at home more, eating the household’s food,” says Tasha Danielle, founder and director of Financial Garden.
To some of the founders of these firms, the motivation comes from personal experiences. When Lorne Jenkins, founder and CEO of Mini Money Management, was 8 years old, his mother “hired” his sister and him to do chores. From their “earnings,” they had to contribute to rent, utilities and laundry one summer. “We really learned about money growing up, like everyday experience,” Jenkins says.
Now they want to share that learning with the next generation of Americans — and early. In addition to the app, Mini Money Management plans to launch classes and workshops for both children and adults keen to learn more about financial literacy. Meanwhile, Financial Garden, currently an after-school program, plans to teach parents independently in early 2021.
Such financial literacy programs are particularly valuable for children from vulnerable backgrounds. A Chance in Life, for instance, targets children who may be orphans or in home situations at risk for neglect — like single-parent families in which the mother or father must work two or three jobs to make ends meet. “The idea is to allow children to take responsibility for their lives and the lives of those living in their community while learning important concepts, like how society works, how decisions are made democratically and most importantly, how to make financial decisions,” says Gabriele Delmonaco, president and executive of A Chance in Life.
Though it’s new to the U.S., the program’s strategy has been tested for 70 years in multiple campuses across Africa, Asia and South America. The program, initially founded in Italy after World War II, was geared toward homeless and hungry children. A Chance in Life has captured the attention of big-name donors including companies like Morgan Stanley and Oracle, and even baseball franchises like the San Francisco Giants, according to its donor list.
With the rising cost of higher education, financial literacy is vital for young adults, say experts. “I think it is ridiculous that kids don’t learn financial literacy and personal financing in school,” says Harsh Patel, CEO of job training program Galvanize, which teaches students about data science and other related subjects. Students pay back their tuition as a share of their income once they land jobs.
If the whirlwind of catastrophic events that is 2020 sparks an improvement in the financial literacy of the next generation of young Americans, it might be one of the few positives to come out of the year.
- Andrew Hirschfeld, OZY Author Contact Andrew Hirschfeld