Leadership Project
Abstract:
My initial goal was to learn about the current status of financial education infrastructure in the united states and how it can impact an individuals’ ability to climb the socioeconomic ladder. This later turned out to be my current research question, “Considering past efforts by the public educational system, why has financial education been unable to promote economic mobility within the US?.” During my research, I found that financial education decreases the likelihood of accumulating debt, and being financially literate allows individuals to become responsible decision-makers in their adult lives. Even though this is agreed upon throughout the academic community, current educational practices in the United States do not represent these findings. My research project is based on educating children and young adults, with the primary goal being to increase students’ potential social mobility through educational events. With financial education comes an increase in people’s capacity to save and gives individuals improved capabilities to break the cycle of poverty, all of which I am working to make a reality for impoverished students from my district. For my project implementation, I will be conducting an educational experience for students attending Franklin High school in New Jersey by working alongside the “Master Your Card” team from Mastercard. My goal is to create a positive experience between students, administrators, and myself by conducting financial education events, with the eventual goal being expanding the lackluster fiscal education programs currently available at the school. Putting on successful events will show the potential for future financial programs within the district, helping to further my goals for the future of such programs.
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Research Question
- Considering past efforts by the public educational system, why has financial education been unable to promote economic mobility within the US?
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Executive Summary
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- One of the most extensive problems in the modern world is income inequality, alongside a lack of socioeconomic mobility. It is often insinuated that when everyone simply looks out for themselves, all turns out well in the end. While the standard of living over the past century has risen drastically within the United States, there still remains a significant disconnect regarding the wealth gap that continues to grow larger by the day. While there is a multitude of factors that contribute to this divide, fiscal responsibility plays a large role in the outcome. Many adults in the United States have little to no savings, with a vast number of people in extraordinary amounts of debt. Why have people remained stuck where they are, unable to escape America’s consumption culture? In part, this phenomenon can be attributed to a lack of “know-how,” or in other words, people don’t know how to save or use financial resources to their advantage.
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- Thus far, my goal in my research has been to figure out why current financial education has failed citizens across the country, and then figure out what can be done to combat the lack of financial knowledge pervading the nation. Though I may not be able to find a concrete answer to this question, my intention remains to analyze the role education plays in contributing to financial literacy and good monetary habits and how this process occurs in the context of public education systems. Working towards an increased understanding of the overarching system dictating consumer and investment education can help aid in enhancing class mobility. Given this massive issue impacting the modern world, I have taken it upon myself to develop a social action project within my local community utilizing the resources provided by the “Master Your Card” program by Mastercard. While working alongside district administration in the school system, I will facilitate courses and events focused on developing students’ fiscal knowledge.
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Background
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- Studies have shown that financial education results in a decreased likelihood of accumulating debt, and financial literacy allows individuals to become responsible decision-makers in their adult lives (Brown 2015). As the wealth gap continues to increase, there seems to be little substantive action taking place concerning equipping individuals with tools they can use to better their living situations. While many adults hold no investments whatsoever, this is overshadowed by the sheer number of people in debt to the point of having a negative net worth. Many factors contribute to this phenomenon, but it cannot be denied that an understanding of sustainable consumer habits can be a tremendous aid in breaking out of poverty. A lack of knowledge can be crippling to anyone when confronted with complicated financial decisions. It is far too often that uneducated decisions result in years of torment for individuals and families across America.
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- While in many schools across the United States it is required to complete a financial literacy course, this is often not enough. Learning how to balance a check and manage bank accounts alone are not enough. Additionally, it is common for students to forget the information they learn due to the structure of a lesson. Across the board, it is agreed that financial education among young students is effective, especially when students are given the opportunity to practice fiscal independence. It is understood that “active participation promotes greater understanding…” and that “…experience obtained through economic participation, as opposed to experience derived from passive observation or information that is merely inferred, can enhance the child’s economic understanding” (Sherraden 2011). When students are given the opportunity to utilize what they have learned, they are much more likely to retain that knowledge to use later on in life.
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Key Stakeholders
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- State and Federal Government Officials
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- Lawmakers (i.e., elected officials, district attorneys, policy analysts, etc.) have a responsibility to ensure
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- Children
- Whereas for many people, it becomes increasingly difficult with age to teach new things, children are able to absorb information with ease when they are young. It would be a disservice to young adults and children to not implement financial education programs now, resulting in them being unequipped to make major monetary decisions in the future.
- Individuals in poverty
- Financial illiteracy is but one cause of many that contribute to poverty and lower socioeconomic status. However, it is in everyone’s best interest to understand all of the monetary decisions they make, as such an understanding increases the likelihood of financial stability.
- Children
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Appraisal of Past Solution
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- The majority of academia agrees with the premise that financial education leads to immense impacts on individuals’ economic habits in their futures. When people understand the financial concepts that they make in their everyday lives, they are able to save more, consume responsibly, and increase their ability to make it out of poverty. While there is a pervasive discourse around how much various factors influence economic mobility, there is no question to the fact that financial education makes a difference in social mobility.
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- Up until recently, only 20 states have required students to take a high school economics course to graduate, and only 17 states require a course in financial literacy (Watts 2005). While state legislators across the nation have been making efforts to curb the financial knowledge gap, many children will graduate without ever engaging with financial material. According to the Council for Economic Education, students exposed to mandated personal finance education exhibit meaningful credit outcome improvements. Three years following the implementation of mandates in Georgia, Idaho, and Texas, severe delinquency rates for those students receiving the education declined by 2% in Georgia, 2% in Idaho, and 6% in Texas, and credit scores increased by 2%, 3%, and 5% respectively (Council for Economic Education 2020). Efforts around the country are taking hold, and change is being made. Even so, the majority of students are neglected and do not receive adequate instruction concerning personal financial, spending habits, and investment opportunities.
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Project Plan
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- November
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- Further develop my relationship with my new friend, Jimmy, at Master Your Card, and complete training for facilitating educational events.
- Contact district Board of Education President Nancy Lacorte, familiarize her with the plans I have for the upcoming months and establish a suitable course of action with the district to virtually facilitate events.
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- December
- Continue contact with district staff members and reach out to staff members I already have relationships with to see what additional resources are available for the project and get an idea of how current school activities are taking place in a virtual climate.
- Take time to discuss with the principal a suitable time and date for the event to take place.
- January
- Finalize any of the remaining logistical matters that need to be addressed, consult Jimmy regarding the final layout, and keep him in the loop (mainly to further our relationship!)
- [Will occur in either January or February, depending on the response from the district and school principal] Hold the first event!
- December
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Conclusion
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- There are many methods and avenues that can be taken to go about teaching financial literacy. Still, a specific process is brought up time and time again by scholars. Researchers make a point to convey the importance of a hands-on education, where students can begin practicing economic participation while learning efficient consumer habits from instructors. The majority of literature I explored supported the idea that children learn best from hands-on experience in learning environments. These educational experiences do, in fact, aid individuals in market decision-making later on in their lives. As such, I will be taking the route of developing and promoting financial literacy courses in my district with the help of “Master Your Card” and other district staff. In following through with events and classes, my goal is to gain a positive perception and reform the current state of fiscal education in the district.