Financial illiteracy making hard times worse for some

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By JEAN ORTIZ/Lincoln Journal Star

Rising numbers of foreclosures, bankruptcies, sky-high credit card debt and the struggle of families make ends meet, all are things Jennifer Clark and others who share her mission would love to leave to the past.

As president of the Nebraska Financial Education Coalition, a growing group formed to link those wanting to solve the problem of financial illiteracy in Nebraska, she knows the gloomy economic climate will present even more challenges, though also greater motivation to find solutions. 

“I think it certainly gives us a sense of urgency in terms of wanting to see if there are ways for us to get the message out about what’s available,” she said.

The reasons consumers are struggling financially are as diverse as the people caught up in the troubles, said Roger Butters, president of the Nebraska Council on Economic Education.

“It would be hard to say there is a single reason for financial difficulty,” he said.

For some the problems stem from spending beyond their means and making bad decisions. For others its unforeseen medical expenses or a job loss that set them back.

Lack of skills only makes it easier to fall into a pattern of bad decision making, Clark said. For some it as basic as knowing how to balance a bank account — a chore that has evolved as consumers took to online banking and debit cards and pushed their checkbooks and traditional registers aside.

For others, it’s about understanding how to make the best choices when it comes to mortgages or retirement planning, she said.

Where that understanding is coming from is part of the problem, Clark and Butters agreed.

People don’t commonly sit around the dinner table talking about how to manage a credit score or how to pick a mortgage, Butters said.

Money management or financial hardships are just taboo subjects not likely to work their way into conversation in some households, Clark said.

Financial education in the schools

Financial illiteracy is a problem documented by educators as well.

When high school students are using credit cards and college students are carrying several, it becomes all the more important for Nebraskans to become better prepared, according to a report offered to the state Board of Education in December 2006.

The report, compiled by the Nebraska Council on Economic Education and the state Department of Education, found about 88 percent of the 341 public and private high schools in the state offered at least one financial education course during the 2005-06 school year.

The report is the most recent completed by the department.

An online survey conducted by the council in the fall of 2006 and with 178 high schools reporting, 54 require either personal finance or consumer economics for graduation.

The report also says more schools are expecting students to have some form of financial education. It specifically mentions Lincoln Public Schools and its requirement that all graduates take five credits, or one semester, of economics through either a social studies course or a business course that includes a personal finance focus. The subject also is integrated through other courses offered by family and consumer sciences and mathematics.

Financial education is an essential skill for students in the 21st century and having a population that is economically literate will pay dividends in the state’s future, those connected with the report concluded.

Cornhusker Bank steps up

As the mortgage crisis plays out and other personal financial struggles deepen, those invested in the issue say they can’t wait for the next generations to see relief.

Adults need help now and their day-to-day juggling of careers and family life make it all the more challenging to reach them, Clark said.

One place where it seems easiest to address money management issues is in the workplace. Many employers are stepping up to offer programming, whether using in-house staff or lining up outsiders with more expertise and doing it on the clock for employees.

That was the case at Cornhusker Bank, which tapped a young professional from outside the bank to answer employees’ concerns about money management.

The sessions were designed to offer employees a different viewpoint, a peer model who could help clear confusion and offer tips to help keep or put employees on the right track, said Steve Lindgren, executive vice president and chief operating officer.

The sessions touched on everything from basic budgeting to retirement planning.

“If you get the money stress out of their lives everyone is more productive,” Lindgren said.

Multiple efforts are under way as well, whether by the coalition, the council or others.

The Nebraska Council on Economic Education focuses on the K-12 set, using five economic educational centers across the state and teacher training to maximize its reach.

The council has distributed more than $50,000 in curriculum materials to schools across the state in the last two years, Butters said.

The coalition, meanwhile, is working to establish itself as a resource to help businesses and organizations team up to make their resources stretch farther. It’s a means to share information statewide and help the groups that are working on the issue network better.

It sounds like a lot of groups are working on the issue, said Julie Kalkowski, managing director of the Nebraska Financial Stability Partnership — a joint effort of the University of Nebraska at Omaha and the United Way of the Midlands.

“But the need is so tremendous,” she said. “It really takes all of us.”

Reach Jean Ortiz at 473-7107 or jortiz@journalstar.com.

On the Web:Nebraska Financial Education Coalition, http://www.kansascityfed.org/nebfined

Nebraska Council on Economic Education, http://www.nebraskacouncil.org