"In trying to get practical economics and financial literacy into the schools, we're bumping up against the emphasis in 'No Child Left Behind' on reading and math," said Dr. Robert Duvall, president of the National Council on Economic Education, a nonprofit group that promotes financial education. Duvall was referring to a federal law requiring greater emphasis on reading, math and standardized tests.

        "People from nonprofits to financial institutions are publishing beautiful and glossy material that's sitting on the shelf because if you go to a beleaguered school principal and say 'why don't you add on a course in personal finance,' that principal is apt to throw you out the door, saying 'if my students don't test well in reading and math, they may close the school,'" Duvall said.

        The number of states that include personal-finance education in their state curriculum standards dropped to 31 in 2002, from 40 in 2000, according to an NCEE survey released this year. But the personal-finance standard is voluntary in 14 of those 31 states.

        The de-emphasis on money classes has taken a toll: A biannual survey of 12th grade students shows a declining level of personal-finance knowledge. "There is a downward trend," said Dara Duguay, executive director of the JumpStart Coalition for Personal Financial Literacy, a nonprofit advocate for greater levels of financial education at all school levels.

        In 2002, the average score on a financial-literacy test was 50.2 percent, a "failing grade," Duguay said. That's down from 51.9 percent in 2000 and 57.3 percent in 1997. "Kids are becoming more financially illiterate," she said.

        Still, some progress is being made. There are four bills now in Congress pushing for a greater emphasis on personal-finance education, and seven states now require completion of a personal-finance course to graduate from high school, up from four last year, Duguay said. The states are: New York, Illinois, Kentucky, Idaho, Utah, Louisiana and Kansas.
 

Programs multiply

        Lawmakers are being moved by evidence of Americans' increasingly tenuous financial situation.

        "Personal bankruptcies were up 19 percent in 2002 over 2001," Duvall said, and "55 percent of our college students now get a credit card walking in the door of their first year in college and are well over $2,000 in non-school-related debt by the end of that first year." Those trends are also leading to the development of a growing number of financial-education programs, programs that for the most part go unused.

        "There's a growing, almost dismaying amount of materials and resources available for the schools," Duvall said. The JumpStart Coalition site lists about 550 programs and materials.

        Corporate names show up on a large number of the programs, though JumpStart evaluates all materials before inclusion to ensure the program doesn't direct students to a particular product or brand.

        Financial-services firms, especially, are underwriting financial education, and for a variety of reasons, experts said. "It's a blend of self-interest and commitment to solving a problem," said Rosella Bannister, manager of the JumpStart clearinghouse and an evaluator of the programs listed there.

        "Many people don't know how to invest. They hardly know how to save, much less anything about the market (and) companies are really interested in having our society be more informed about managing money," Bannister said. "But also it's self-interest in that the financial services industry ... would do better if they had knowledgeable consumers."

        The problem now, for teachers, administrators and parents alike, is that no independent agency has evaluated which programs work best and why. JumpStart has convened a task force to study the issue, and the NCEE is working on federal legislation that aims to do the same.

        In the meantime, a parent interested in advocating a particular program for his or her child's school should look for one developed by an organization with a track record for creating curriculum, Duguay said.

        Also, make sure it's interactive rather than lecture-based. "Is it engaging? Does it involve activities for the kids?" she said. "We find that interactive curricula is more effective than something where a teacher is just lecturing."

        The program should also be current. "The whole world of personal finance is evolving and changing so rapidly," Duguay said. "If you're teaching with a curriculum that's five years old, it may not be talking about most of the newest instruments, such as a stored value card." And finally, make sure the program is comprehensive. For instance, it should discuss saving as well as money management. "If you don't know how to manage your money, you're never going to have enough to save," Duguay said.
 

Five of the best

        Financial program experts offered the following as among the best of the available programs, though it's important to note that what works best for a particular teacher and classroom will vary widely. For more options, search the JumpStart clearinghouse.

        National Endowment for Financial Education's High School Financial Planning Program, for 9th through 12th grades, a free comprehensive curriculum that includes personal goal setting, budgeting, saving, investing and credit use.  Financial Fitness for Life, created by the National Council on Economic Education with funding from Bank of America, covers all aspects of personal finance, teaching kids from kindergarten through high school about saving, using credit, understanding the stock market, buying smart and managing money. Prices vary from $12 to $80, depending on the materials purchased.

        The National Foundation for Teaching Entrepreneurship and Merrill Lynch created Investing Pays Off, a free curriculum that teaches children ages 7 through 18 about personal finance and entrepreneurship. Operation Hope and Wells Fargo's Banking on Our Future, a free program for grades 3 through 12, which covers the basics of banking, balancing a checkbook and, for the older grades, investing. Junior Achievement's Personal Finance for 9th through 12th grades, an online program covering topics such as saving, budgeting, investing and risk management through lessons that discuss home mortgages, financing a college education, payroll taxes and credit reports, among other things. Prices vary.
 

        Young Americans will earn billions of dollars this year, but few are being taught how to manage that money. Schools are too busy focusing on the three Rs to address personal-finance education (see Part 1), and parents, some wallowing in debt themselves, are often hesitant to discuss finances with their kids.

        But judging from kids' spending patterns, they need help. American children, teens and young adults will earn about $211 billion this year, down from $231 billion last year, according to Harris Interactive, based on a survey of 3,400 people aged 8 to 21.

        Yet, while their income has fallen, their spending increased to $172 billion this year, from $155 last year, according to Harris. And, while 72 percent of teens plan to work this year, most plan to spend their earnings on entertainment, clothes or a car, according to a separate survey of 624 teens by Harris for Junior Achievement, which offers in-school projects to teach children about business.

        It's a story many American adults know well. "I got very little training as a kid and I made really stupid mistakes in my teens and 20s," said Maureen Rosen, a human-resources manager and author of Kids Cash Management, a budgeting tool for kids.

        "I was utterly clueless about that kind of stuff" as a young adult, she said, noting that she had credit-card debt and didn't learn to save until later in life. Now, she knows that "if you want to budget and plan and set goals, you have to first know where your money's going." When she couldn't find a ledger book for her kids to use to track their spending, she created her own version, Kids Cash, which runs $12.95 plus shipping.

        Parents and teachers use the book, she said, adding that one parent bought it for his 25-year-old daughter. "If you look at any article about how to get control of your debt or being in control of your money, in any top 10 list there's always the directive: Write down what you spend," she said.
 

Mistakes parents make

        The biggest mistake parents make is not talking to their kids about money, some say. "They keep money as the biggest secret in the household. The kids never understand what anything costs," said Neale Godfrey, the author of 13 books on financial education for parents and children. "We keep saying it's none of your business. Then they don't understand what you're talking about," she said.

        Her books include "Money Doesn't Grow on Trees: A Parent's Guide to Raising Financially Responsible Children" and, for kids, "Neale S. Godfrey's Ultimate Kids Money Book," which includes information on credit, banking and taxes.

        Another mistake: telling your kids you can't afford it, Godfrey said. "The truth is, in most instances you choose not to buy it for the kids, so tell them that." Parents could rack up debt to buy whatever the kids want, but "you choose not to do it," she said.

        Instead, talk about why you won't buy it for them, she said. "That toy costs as much as I spend on food for the week. We could go without food and I could get you the toy. I choose not to. Let's talk about how you can earn money and get that toy," she said.

        Also, parents should allow children to make some spending mistakes, some say. "It's good to let them make those spending decisions whether you agree or not, then afterwards initiate some open discussion about the spending pros and cons before they make their next purchase," said Jackie McCarthy, spokeswoman with the National PTA.

        While games can be helpful, Godfrey said some board games don't help kids connect finance to the real world. "If it's not in context, then they just think you become Donald Trump and buy and sell real estate," Godfrey said.

        In her books, she includes a variety of games to spark children's cost-cutting habits, such as agreeing to split the savings gleaned from any coupons your child finds, or the savings from buying a winter coat on sale in the summer.
 

Online lessons

        Bookstores are rife with personal-finance aids aimed at families, but parents can also find plenty of online resources that offer free or inexpensive tutorials and games. And, the Web is a good place for parents to supplement their own education to avoid embarrassing themselves in front of the kids.

        For instance, the Bond Market Association offers Investing In Bonds, a useful resource for brushing up on how bonds work, and the Bond Market Foundation provides personal-finance calculators and tips aimed at novices at Tomorrow's Money.

        The National Council on Economic Education focuses on getting personal-finance education into schools, but their online store of curriculum materials includes stand-alone parents' guides (for instance, for their Financial Fitness for Life program) for about $12. For help locating parents' resources on the site, contact the Council's marketing director.

        The U.S. Mint offers a page with financial-education tools on a variety of topics, and games for families to use together or for teens alone, and the U.S. Treasury has a page dedicated to teaching kids about savings bonds. It All Adds Up, targeted at high school students, offers various modules to work through, including one that helps kids understand how long it can take to pay off a credit-card balance.

        Junior Achievement offers a free Personal Finance Center aimed at teens, including games testing kids' financial expertise (requires registration).

        At Banking On Our Future, a site developed by Operation Hope and Wells Fargo Bank, 4th graders through adults can find information on balancing a checkbook and how to save.

        The JumpStart Coalition offers a resource database that lists information and Web sites for about 550 programs, online tutorials, books and other resources, including a page created by the IRS for students called Understanding Taxes. Much of the material at JumpStart is free; however, parents will have to sort through curriculums designed for classrooms.