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October, 2007 - SMAC in the News

Flunking finance

Dana Yost

Students in K-12 in southwest Minnesota's schools don't appear to have a strong grasp of personal or business finance, according to results of a survey released Wednesday by the Southwest Marketing Advisory Center.

The results could be used to argue that school districts should raise the profile of their business programs and target students at an earlier age, said Mike Rich the executive director of the study and of SMAC, the marketing group headquartered at Southwest Minnesota State University.

SMAC surveyed 32 schools in southwest Minnesota, working with the SW/WC educational service cooperative and the University of Minnesota Extension. A total of 3,725 students responded.

Results show that students averaged a failing grade on every one of the survey's core questions about finances, and that, on some questions, schools got zero answers right.

"Even the highest scores would be a failing grade," Rich said. "We didn't see stellar scores in the immediate area ... it's kind of sad to see that range of understanding of this."

Yet, the area's results are similar to results of other surveys around the nation, said Rich and student Brandon Tilus, the study's managing director.

"This correlates very well with national studies," Rich said. "We're no worse, no better. It's pretty typical of what you see on a national scale."

The lack of understanding by students often leads to poor money management by adults, Tilus said. The local study cites the national Roper Poll, which shows that 43 percent of Americans spend more than their means. In 2003, 1.6 million filed for bankruptcy, or double the number that filed in 1993.

"That's the reason we really want to look at kids coming out of our schools," Rich said. "The report seems to indicate areas where focus is necessary and (change) needs to occur."

Rich said the survey results were presented earlier this year to a group of K-12 business teachers at a learning forum at SMSU. They weren't surprised.

Rich said he asked if they often felt like second-class or after-thought programs, they said, "yep, that's absolutely right."

"A number of them were excited that they had some concrete results, that it needs to be incorporated into the core curriculum," Tilus said. "Every state is noting a lack of understanding in these areas."

Rich said there are two reasons to improve that: Americans save at the worst rate of any industrialized nation and have one of the highest debt rates. Also, at many colleges, including SMSU, the business department is one of the largest divisions - yet students aren't being prepared for college business programs in K-12.

The survey began with focus groups at Marshall Public Schools, Murray County Central and Yellow Medicine East, along with Holy Redeemer School in Marshall.

Rich used those focus groups to shape questions for the survey in language students would understand, rather than more technical business forms.

Questions were asked of sixth-graders, ninth-graders and seniors. Rich said the sixth-graders' results were "still poor," but they scored better on the survey than their older counterparts.

He attributed that to an increase in curriculum instruction at the lower grades, and also the spread of Junior Achievement, the entrepreneur program that is run locally through the SW/WC and is reaching more young kids each year.

Rich talked about one sixth-grade girl he ran into at Murray County Central who was able to answer most of the questions in the focus group. Her background? She grew up on a family farm, where the family openly talked about finances.

He contrasted that with a question he asked of high schoolers in Marshall: How many owned their own cars? Ten of 12 raised their hands, yet when Rich asked if owning a car had an impact on their finances, most said no, because their parents gave them a credit card for gas and paid the bills - most, he said, didn't even know the size of the bills.

Rich said that extends to general credit card use. Students don't have a good understanding of the consequences, many thinking it is a license to spend freely. He and Tilus said parents should do more to teach their children on such issues.

Tilus said more sixth-graders had checking accounts than ninth-graders, and most students knew you could use a bank account to save money. But not enough, Rich said.

"Everybody understands institutions where you can SPEND, but not where you can save," Rich said.

Tilus said area students, in a theoretical question, would save or invest more money than students nationally. Sixth-graders were asked what they would do if they had $1,000 to spend. Ninth- and 12th-graders were asked what they would do if they had $10,000 - they would have invested $1,000 of it.

"It all reinforces the idea that if we teach kids more about finances through Junior Achievement, through the curriculum - if we spend the time teaching them, they might be better stewards of their own money," Rich said.

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