April 16, 2007

COLLEGE STATION – A Texas high school education just got a little more practical. That's because this academic year – 2006-2007 – instruction in financial education is required as a condition of graduation, said Nancy Granovsky, Texas Cooperative Extension family economics specialist.

April is a good time to focus on this subject because it's Financial Literacy Month nationwide, she said.

Extension has a part in providing one of the Texas State Board of Education-approved curricula thanks to a partnership between the National Endowment for Financial Education, credit unions and the Cooperative Extension system throughout the country, she said.

"The NEFE High School Financial Program has been highly successful in the past," Granovsky said, and has been revised for the 2007-2008 school year. The new national curriculum was rolled out by the National Endowment for Financial Education on March 12-15 in Denver, she said. The Texas rollout, by Extension and the Texas Credit Union Foundation, was March 29 in Dallas.

"The Texas law – HB 492 – was signed into law by Gov. Perry in 2005 (and) requires schools to incorporate instruction in personal financial literacy into any course meeting a requirement for an economics credit," Granovsky said.

The 12 required topics are:

- Understanding interest; avoiding and eliminating credit card debt.

- Renting or buying a home: rights and responsibilities.

- Managing money to move from renting to home ownership.

- Starting a small business.

- Investing in the stock market and other options.

- Beginning a savings program and planning for retirement.

- Understanding bankruptcy.

- Understanding the types of bank accounts and their benefits.

- Balancing a checkbook.

- Knowing the types of loans and becoming a low-risk borrower.

- Understanding insurance.

- Knowing the value of charitable giving.

These may sound like simple common sense facts of financial life but they are not, Granovsky said.

"It's not ‘common sense' to everybody if you've never seen it done," she said. "It's not common sense to know how to pick the best credit card; it's not common sense to know how much you need for retirement; it's not common sense to learn how to distinguish between ‘needs' and ‘wants'."

Young adults especially need to have a working knowledge of these 12 items because too many of them are facing financial issues, she said.

For example, the high cost of going to college can be a difficult thing for young people to face, Granovsky said. But through this program young people learn "that's a form of good debt because your earning capacity will be greater than if you did not go to college, in most cases. So advancing your education means investing in your future, even if you must borrow to do it."

The financial education program teaches students practical knowledge of personal finances and develops important skills, Granovsky said.

"We teach kids the importance of education in being able to earn a living," she said. "Now for the first time we have young people learning to manage the money they are earning."

Managing money and establishing a pattern of saving for future needs are growing more important, Granovsky said.

"One of the most important issues for the future of America is financial security in later life," she said. "As traditional pension plans become less common, people's financial future is going to depend on their ability to save and invest wisely.

"Currently people save very little, as shown by a negative savings (rate). When we rely on credit and have more debt obligations, it means less saving for the future."

Then there is the "complexity of the financial marketplace which requires a high degree of understanding about what you are doing," Granovsky said.

Fortunately, she said, "For young people, time is on their side. They can start early to save for the future, which is why personal finance is so vital to learn before graduating from high school."

The earlier young people learn to pay themselves first, she said, the less they will need to save each week, since they will have more weeks in which to save.

For more information about the high school financial planning program, visit the National Endowment for Financial Education Web site at http://www.nefe.org/ . The curriculum and student workbooks are available free to educators. The program meets Texas state educational standards, Granovsky said.

More information on family economics issues can be found at Extension's Family and Consumer Web site at http://fcs.tamu.edu/ .