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DICKIE: Fake it till you’re broke

Americans can’t manage their own money

- - Thursday, September 20, 2012

In an image-centered culture where "fake it till you make it" bravado seems like good advice, a growing financial-education deficit is destroying many lives while illustrating a harsh reality: Some things in life just can't be faked.

A national crisis in financial education contributes to the current willingness to embrace buy-now-pay-later logic, whether the spender is Uncle Sam on a spree with taxpayer dollars and a credit card from China or any average household, where "budget" is just a word on a child's spelling test. Financial strain and growing personal and national debt have a stranglehold on Americans in a sluggish economy that has crawled for 43 months with higher than 8 percent unemployment.

But the keys to surviving and thriving in such an environment begin with tough financial choices, made with intent. Financially ignorant, many Americans have no idea how to impact their financial health. About 1 in 5 Americans surveyed by the Princeton Survey Research Associates said that they do not keep track of their finances.

Stepping up to the plate, America's high schools are beginning to respond to this chronic naivete of what to do with your money once you get that elusive job. Today in America, 36 states require some financial education before a student can graduate from high school -- and that is a good beginning. Such a requirement for graduation should be mandatory in every high school. But for many Americans, this program is too little, too late. Generations are struggling without the right tools.

Earlier this year, USA Today examined the financial literacy of young people in particular and found a serious problem.

Reporter Hadley Malcolm wrote, "The Treasury Department and Department of Education have teamed the past three years to assess financial literacy in U.S. high schools, and the results haven't been pretty: The average score of almost 76,900 students in 2010 was 70 percent. Last year's testing of about 84,000 students and this year's of about 80,000 students were both a point lower: 69 percent."

Flunking out of biology is a modest failure that will have very little long-term impact for most people. Flunking out of personal finance could be a portent of doom. This problem is especially severe among lower-income Americans.

This week, the Federal Deposit Insurance Corp. released a report showing that from 2009 to 2011, 8.2 percent of American households did not have any relationship with a bank and possessed none of the tools for long-term financial health, such as a savings account. Even worse, 28.3 percent of households had either no bank accounts or only one and used that sparingly. Not surprisingly, this is a problem most chronic for low-income Americans.

While this tragic lack of basic tools, such as a savings account, illustrates the vulnerability of a huge segment of Americans, it also signals danger for the next generation. Also in the Princeton survey, researchers found that almost half of Americans who keep a close eye on their finances say they learned their financial skills either at home or from their parents.

But are their parents up to the task? Looking at America's saving rates, the answer seems to be no. About 69 percent of parents admit that they feel more prepared to give a sex talk to their kids than to give guidance on investing, according to Charles Schwab's 2008 "Parents & Money."

We can't expect people with zero financial skills to make insightful choices or engage effectively in teaching their children about money. It's time for a national discussion of skills and tools that are just as important as reading, writing and arithmetic.

Groups like Crown Financial Ministries, recognizing the national tragedy of the financial-education deficit, have developed curricula such as MoneyLife, which begins with an intricately designed series of assessments and ends with tools and free counseling sessions with people whose life's work is to make an understandable plan that works and to provide a helping hand.

Help is needed. Over the past 35 years, Crown has helped hundreds of thousands of people learn how to handle the most basic of their natural resources -- money. It is interesting to note that in the subject line of the vast majority of the panicked emails that come to Crown, people type simply, "Help me."

To begin reining in debt and deficit spending, to make a working budget or to save effectively, Americans first need some skills. As a nation -- whether in schools, churches or halls of government -- it is time to seriously address the financial-education deficit that is contributing to our current decline.

Robert Dickie III is president of Crown Financial Ministries.