Looking dapper in a blue shirt and striped tie, 11-year-old Quinn Krueger leaned over his desk and peered at plans for his company’s next project — a park bench.
Krueger was CEO of the only construction firm in BizTown, a simulated city at Junior Achievement in Maplewood, Minn., where fourth- and fifth-graders spend a day learning to run a business, work for a boss, write a check, pay taxes and do payroll.
“We’re selling the bench for $75,” Krueger said. “We’re doing good.”
With kids zipping back and forth and bemused parents and teachers looking on, the program is among the more elaborate attempts to teach children to become financially literate.
There is, however, a problem with this well-intentioned effort to teach youngsters personal finance: Educators haven’t found an approach that clearly works.
“I wish it weren’t true, but it is,” said Lauren Willis, a professor at Loyola Law School in Los Angeles who has published several papers on the subject. “Math matters, but these financial education programs do not.”
Repeated research has shown that classroom personal finance instruction does not translate into financial literacy or wiser financial decisions. Students don’t remember what they learn, and the lessons become outdated too quickly.
Willis said programs that get students to interact with the material can work better. That’s the idea with BizTown, as well as a program Junior Achievement runs that lets ninth-graders compete in a computer business simulation.
Other models that have been successful include cooperation from parents, and giving students the skills to find and analyze information on their own.
But while few would dispute that too many American high school graduates lack the skills to navigate their finances, many experts argue that financial literacy education has more work to do to remedy the problem.
The Jump Coalition, a group that’s been widely credited with popularizing financial literacy training, was formed in 1996 by a coalition that included banking and credit card industry groups, the Federal Reserve Board, the National Council on Economic Education and Junior Achievement, among others.
The economy was growing, the stock market was doing well and yet bankruptcies were on the rise, said Lewis Mandell, an economist involved from the beginning.
In 2000, Mandell started asking students he surveyed whether they had taken a semester course related to personal finance, to see if those who had were answering more questions correctly than their peers. The results were dismal.
“There was zero difference,” Mandell said. “We did this for five separate national studies of high school seniors, and we found no difference.”
Among college students, those who had taken a high school class did no better than those who had not. Even college classes in personal finance, business and economics failed to register a statistical benefit. Instead, what predicted smart financial decisions was analytical skills and problem-solving ability. Engineering and science majors performed the best.
Educators have not found an effective way to teach financial literacy in the classroom, but they have learned a few things. Games and competition help. So do basic skills on how to find information, and parents.
“Like anything, if it’s not reinforced at home, it goes out the window,” said Joanne Kuster, a personal finance speaker and blogger.