Obama Administration: Financial Literacy Is a National Crisis

Two of the top members of President Barack Obama's cabinet made it very clear earlier this month that the lack of financial literacy among America's youth is the next major crisis that will plague the economy in the future if we don't act now as a nation.

"We're moving forward with financial reform and strong protection for consumers, but we must also do a better job of making sure our students graduate from high school with a better understanding of basic economics, basic finance and the benefits and risks associated with debt," said Treasury Secretary Timothy Geithner. Education Secretary Arne Duncan agreed.

"The reality is that all children don't know the basics of saving and investing. It's a skill they need to be successful in our economy," Duncan said.

The National Youth Financial Educator's Council (NYFEC - www.FinancialEducatorsCouncil.org) - an organization dedicated to increasing youth financial education through live events, curriculum, multimedia training, parent and educator instruction - agrees with the sentiment. However, they believe a more holistic approach is needed to solve the problem.

"Comprehensive solutions that reach our youth multiple times through several different sources can help our children pick up ‘real world' financial literacy skills," said Vince Shorb, current president of the organization. "We see positive results when we start financial literacy campaigns off with high energy kickoff events that motivate our participants to start taking positive action. This is typically followed by financial literacy curriculum, multimedia learning center education, day camps and parent and educator training."

Their signature kickoff event, Money XLive, is an MTV award style event that brings out celebrities, sports stars, live bands, entertainers and financial education experts all in a full concert style environment. "While Money XLive is the preferred event for large scale financial literacy initiatives, the self-hosted financial education events are becoming increasingly popular."

"Since our team of certified financial educators can only reach a limited number of people, we have put a lot of our focus into helping nonprofits, financial planners, students, schools and community leaders to empower tomorrow's generation with financial skills. Financial literacy is a grassroots movement, and we provide complete financial education resources so the movement will spread faster," states Shorb who developed the Money XLive Multimedia workshop so people can host their own financial education events.

The National Youth Financial Educators Council believes that communities need to deliver a practical financial education to our youth, or people will continue to struggle for many generations to come. To that end, and in order to help empower all of the children in our nation, Money XLive Financial Literacy Workshops have been created to help facilitators host their own financial literacy events in their community.

Sarano Kelley of the Stand Up for Financial Literacy campaign states, "Empowering citizens that are concerned with the financial well-being of our youth is an important step in ending this national financial illiteracy epidemic. We are calling on all financial professionals and concerned citizens to go into classrooms across the country and share financial wisdom."

Reports show that financial literacy is still not taught in most high schools and colleges, and the few schools that do, teach more theory-based financial literacy. Nonprofit organizations like the Joyner-Walker Foundation and the Brockman Educational Institute are taking it upon themselves to provide financial literacy training for students.

Since most schools do not provide financial literacy programs, the majority of youth report their parents as the primary source of learning about money. To help parents open up the lines of communication with their children about money, the NYFEC also conducts live and virtual parent training events called Money Smart Parent.

Treasury Secretary Tim Geithner states, "Before our children are old enough to drive or vote, they're offered credit cards. And yet by the time they have graduated high school or they may have learned something about the history of the gold standard, while they may understand how to solve quadratic equations, few have learned enough about the basics of debt, about compound interest, about the risks associated with investing and borrowing."

"I wish I was given a practical financial education when I was younger - is what I am told by almost everyone, when I share with them what I am doing," Shorb added. "Would you throw your kids on a freeway without driver training? Then why do we send our kids into the real world without financial literacy training?"