FARAI CHIDEYA, host:
And what your kids know about money before they're old enough to strike out on their own, the Jump$tart Coalition champions financial education for kids from kindergarten through twelfth grade. Three years ago, Jump$tart tested high school students nationwide on basic financial skills, and over half of the students failed. The results were even worse for African-American teens.
Jump$tart executive director Laura Levine spoke to NPR's Tony Cox about the study.
TONY COX: You say in the beginning of this report that the news is not good, and that over the last 10 years, going back to 1997, that there is a steady decline in the literacy of African-Americans as it relates to spending. Is that true?
Ms. LAURA LEVINE (Executive Director, Jump$tart Coalition): I wouldn't categorize it as a steady decline, but we haven't seen any improvements. In fact, the first year that we did the survey in 1997, African-Americans scored about 50 percent, and that was the best that they'd done since we started conducting the survey.
Now the same can be said for other ethnic groups and for the national average of all students combined. That the first year we did the test in 1997 they did better, but still not well. The national average has hovered around, you know, in the 50 percent range, and African-Americans, unfortunately, have hovered more in the, you know, the 40-50 percent range.
COX: Let's talk about what the scores mean. Theses are in response to a 31-question survey…
Ms. LEVINE: That's right.
COX: …that measures how well these young people do when it comes to handling money. What kinds of things did you test for in the survey?
Ms. LEVINE: We asked them basic questions about personal finance, things that we thought were appropriate for, you know, young adults, older teens to know -things about credit cards, car insurance, in common and so forth. And, unfortunately, what the percentage that we've been talking about indicates is the percentage of questions that the students got right.
So, in other words, students are getting less than half of the questions on our test right. And we're seeing these low scores really across the board. We've been particularly concerned that African-American students are scoring lower than the average. But even if you look at the average and even if you look at any of the categories, students are, by and large, not passing the test.
COX: Now looking at the survey, I have it in front of me, and even though everyone is doing poorly and whites are doing the best of the poor, if I can put it that way.
Ms. LEVINE: Right.
COX: But the blacks are doing the worst of the poor. Why is that?
Ms. LEVINE: You know, we're not sure. We are looking not only at ethnic groups but we're looking at levels of income, levels of education.
COX: But in your survey, your study also show that black kids do better in spending compared to whites. What did you mean by the spending?
Ms. LEVINE: Well, what we meant by that is that the questions that relate to spending, you know, how we spend money relating to making purchasing decisions. That the students did better on those questions. The score wasn't relative to their actual spending but rather their knowledge about spending. And so what we're finding is that these students are more savvy spenders. They know a little bit more about, you know, how they're making choices, about what they're spending on.
COX: Your study found that higher income is not necessarily related to financial literacy for the black participants. And that kids, in fact, from lower income black family backgrounds scored higher than the kids from black families that have more money.
Ms. LEVINE: Right.
COX: How do you explain that?
Ms. LEVINE: Well, you know, we don't have an explanation. We have a theory. One of the theories is that the students from these lower income families are perhaps having to deal with the actual finances of the family at an earlier age than their more affluent peers. For example, they might be going to work at their part time jobs after school to help contribute to the family income. So just because of that experience they may be a little bit more savvy about personal finance.
COX: Talking about parents to follow that point. How much of the reason that young people are having difficulty can be laid at the doorstep of their parents?
Ms. LEVINE: What we're finding is that parents themselves, you know, are not confident about how they're handling their finances. I mean, if we just look at other consumer statistics, our savings levels are actually a negative number. In fact, we're losing savings. We know that bankruptcies are on the rise.
So when you look at those things, and those are the adult consumers and then theoretically the parents of these kids, we also know that the parents are, for whatever reasons, not inclined to want to talk about money with their kids, whether it's because they've made some mistakes of their own and they don't want to share that with their kids.
And sometimes it's a matter of the whole financial world today is more sophisticated than it's been in the past. So they themselves are not feeling comfortable and so they're not having the discussions with their kids.
COX: What specific things need to be addressed in order to get that literacy up higher, and what should we begin to do now?
Ms. LEVINE: We need to introduce personal finance as a topic of education in school. And then we'd like to see it reinforced with discussion at home around the dinner table with other family members.
COX: Laura, thank you very much, very good information. We appreciate it.
Ms. LEVINE: Thank you for having me.
CHIDEYA: That was Laura Levine, executive director of the Jump$tart Coalition, talking with NPR's Tony Cox. To check out the rest of our Minding Your Money series, go to our Web site, npr.org/NEWS & NOTES. Just ahead, Alberto Gonzales defends his decision to fire eight U.S. attorneys. And later in the show, it's an oil-producing nation with extremes of wealth and poverty. We're talking Nigeria and its upcoming presidential election. This is NPR News.
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