Financial Literacy: As Important as the Three R's

I know this may be hard to believe, but I actually didn’t learn much about managing money when I was growing up. Yes, I know--my father is Charles Schwab. But he didn’t found his company until I was 15 years old. When I was a kid, he was a struggling business man, and as a family we just didn’t talk that much about money.

I think the first time I started to appreciate the importance of money was when my parents got divorced. I was nine years old. My dad was working hard to get his business off the ground and my mother was very much a woman of her time. She was a Stanford Phi Beta Kappa but at the same time a homemaker who needed to figure out her finances, among other things.

As I watched her struggle to get her footing, I realized that I, too, had a lot to learn. From that point on I knew that I wanted to learn about budgeting, saving, and whatever else it would take to achieve financial independence. Now that it’s Financial Literacy Month, I want to reinforce how important it is that everyone know this stuff. It doesn’t matter if you’re rich or poor, man or woman, young or old. We all need to know how to create a budget, live within our means and plan for the future.

When it comes to finances, though, many of us have our heads in the sand. Did you know, for example, that nearly half of American adults can’t cover a $400 emergency expense without having to borrow or sell something?(1) Or that nearly one-third of Americans with a retirement account have taken out a loan against it? (2) Or that 20% of parents with retirement funds plan to use them to pay for their child’s college (and thereby seriously jeopardize their retirement)? (3)

Financial literacy isn’t just about managing money. It’s also about opportunity and a brighter future. It’s about the freedom that comes from being able to weather a crisis and enjoy your dreams. And it’s an education we need to be passing on to the next generation. 

That’s one of the reasons why Schwab launched a program earlier this year to help fund financial literacy projects in schools. We’re currently doing this by offering matching grants for financial literacy projects through DonorsChoose.org. If you don’t know about DonorsChoose.org, it’s a wonderful website where teachers from public and charter schools across the country post projects they need help funding--and individual donors choose the projects they want to support.

We’ve been involved with DonorsChoose.org for just a few months but we’ve already helped fully fund 352 financial literacy projects. They’ve been really cool, too. One of the projects helped high school students understand what it’s like to create a start-up by playing board games. Another helped kindergartners figure out how much pennies and nickels were worth by using Google Home speakers. 

I’m glad we’re doing this but I still think it would be better if financial education ranked up there in schools with reading, writing and math. Currently fewer than half of all schools across the country require a course on personal finance. Think about that: Fewer than half. How could learning to save for a home or plan for retirement not be as important as algebra or geometry? 

One of the ways we’ve tried to fill this gap at Schwab is by joining forces with Boys & Girls Clubs of America (BGCA) on a program called Money Matters: Make It Count. Money Matters teaches Club teens the core personal finance understanding and basic money skills they need to handle car payments and mortgages, college financial aid and student loans. Since we started the program 14 years ago, more than 725,000 teens have completed it.

One of the Club teens in San Francisco, 18-year-old Wendy Kha, told me what she liked about the program. “You get to have all these experiences of what it’s like to start a family, buy a car or save for things like a vacation or college,” she said. “Now that I’ve learned these skills, I understand the basics of what I’m planning for.”

LaCresha McManus, director of city-wide teen services for San Francisco’s BGCA, says that one of the biggest benefits of Money Matters is that the kids bring their new knowledge home to their families. She told me a great story about teen participant who was shopping with his mother and told her, “We can’t buy that, Mom. That’s a want, not a need.” 

(Photo: Left: Wendy Kha, BGCA 2016 Money Matters National Ambassador; Right: LaCresha McManus, Director of Citywide Teen Services, BGC, San Francisco)

If we want the next generation to be financially literate, though, we’re all going to need to step up to the plate. If you want to help, here are a few things you can do: Tell teachers about DonorsChoose.org and encourage them to create and seek funding for financial literacy projects. Look at the website and make a donation yourself. Or call your local Boys & Girls Club and volunteer to help with Money Matters. Seventeen hundred of the clubs across the country offer the program and many of them need people in the financial industry or with financial know-how to help teach kids the ropes. Because it’s not just about managing money. It’s also about giving kids hope. #Schwab4Good

1. Report on the Economic Well-Being of U.S. Households in 2015, Board of Governors of the Federal Reserve System

2. TIAA-CREF Borrowing Against Your Future Survey, Executive Summary, June 18, 2014.

3. How America Saves for College 2016, Sallie Mae

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