Schools teach personal finance

Tessa McDermott is no stranger to budgeting.

The Westside High School junior started paying for gas about a month ago. That takes a chunk out of the paychecks she brings home from an area bagel shop. So she began selling clothes at a used clothing boutique and shopping there, too.

But last week's classroom lesson on insurance, part of the school's new consumerism class, covered mostly new ground for the budget-savvy teen. She learned about deductibles and exclusions, the importance of renter's insurance and the financial risks that come with loaning a car to a friend.

“I didn't know much of that,” she said.

The aim of the eight-week course is to help students learn the basics of personal finance — from budgeting and banking to savings and credit — before they head out on their own.

The need for such information, educators say, recently has been heightened by concern about the barrage of credit card pitches college students face and by an economic crisis that has left many adults reeling.

“In this day and age, this is crucial,” said Rita Leehy, one of two teachers who lead the course.

Other educators agree. More schools across Nebraska are moving toward requiring some kind of financial education, said Bonnie Sibert, career field specialist for business and marketing with the Nebraska Department of Education.

“The economics of the last several years have really brought the importance of financial education to the forefront,” she said.

To be sure, a number have required it for some time. An informal survey conducted by the department and the Nebraska Council on Education in 2006 found that 54 public and private high schools — out of 178 that participated — required a semester of financial education for graduation. The department plans to repeat the online survey this fall.

The content varies. Ralston High School, for example, mandates a full semester of personal finance. Students have the option of testing out, but not many do so.

The Lincoln Public Schools district requires students to complete a certain number of hours of economics. Students can choose from a number of courses. All contain a personal finance component, and the district is increasing its emphasis on personal finance in the classes, said Carol Andringa, the district's curriculum specialist for career and technical education.

At the same time, the number of states that require financial education for graduation is growing, said John LeFeber, curriculum and instruction developer for the Council for Economic Education.

The organization surveys states every two years on the state of education in economics and personal finance. In 1998, one state required students to take a personal finance course to graduate. By 2007, seven states required it. And preliminary figures this year indicate that 10 states require a personal finance course.

Neither Nebraska nor Iowa mandates that schools offer courses specifically in personal finance or that students take it, he said.

Most Iowa districts do, however, offer components of financial literacy through existing courses, a spokeswoman for the Iowa Department of Education said.

The Westside district in Omaha for years has required students to pass a minimum competency test in consumerism to graduate. They typically picked up the information in business classes or other courses. Or they could review a study guide on their own.

Pat Hutchings, Westside High principal, said faculty members didn't think the subject was getting the attention and direct instruction it needed.

Consumer credit was a particular concern, as it has been elsewhere. According to lender Sallie Mae's 2009 survey, 84 percent of college undergraduates had credit cards, up from 76 percent in 2004. Half of college students held four or more cards. Seniors were graduating with an average of more than $4,100 in credit card debt, up from about $2,900 in 2004.

“You can read about it, but you need to see more real-life examples of what this can do to you,” Hutchings said.

Beginning this year, all Westside students are required to take the class and pass the test unless they've already done so through a personal-finance-focused course called “Today's Business,” which Leehy also teaches.

Leehy went to consumer credit counselors and others to focus the streamlined course. She homes in on topics that are relevant to them now, such as automobile insurance rather than life insurance. Students attend once a week. If they miss a class, they can attend another session or listen to a podcast.

Leehy said she finds that students typically don't get such lessons at home. They often ask her how people learn it if they don't take a class. “It's called the school of hard knocks,” she said.

She told the story of a fellow teacher who recently lost most of his belongings in an apartment fire — he had renter's insurance — to demonstrate the importance of such coverage.

She reminded them that loaning their cars also means loaning their insurance, telling of a former student whose girlfriend hit a Porsche — the students groaned — with his car. His insurance, not hers, had to pay.

McDermott said she's sure the lessons will come in handy when it's time for the students to step out from their parents' policies and arrange their own coverage.

Senior Ulysses Larios said he'll definitely remember Leehy's warning that auto insurance won't necessarily cover the theft of an expensive stereo from a car. An insurer would replace what's standard in the vehicle. Larios doesn't have such a stereo in his car, but he has thought about installing one. He would want to notify his agent of the change and make sure it would be covered.

“I would hate to have to replace all that,” he said.

Contact the writer:

444-1223, julie.anderson@owh.com

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