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A Financial Literacy Program for Kids, With Corporate Sponsorship

This article was written by in Education. 10 comments.


The best place to learn solid financial behavior is at home. Although a kid’s environment at school and among peers is important in his or her development, the biggest influence on a growing child’s set of values is the behavior of the parents. Parents are role models, so in a perfect world, they are best suited to solve young adults’ lack of preparedness for handing the world from a financial perspective.

Parents, on the other hand, are often ill-equipped for this responsibility, so public school teachers are left to pick up the slack for parents who can’t or won’t be the role models necessary. The lessons aren’t difficult, but financial behavior is so embedded in life at home, poor models there can easily undo any lessons taught in a school environment. Although New Jersey updates its public school curriculum standards a few years ago to require 2.5 credits in financial, economic, business, and entrepreneurial literacy, the typical class is not going to be effective for establishing solid financial behavior.

Eighth gradePrograms that teach financial literacy need to get creative. If there’s ever a chance for the banking industry to get involved with its future customers at an early age, this is it. Capital One sees the benefit in teaching young children how to use its products and is sponsoring the “Finance Park” program, coordinated by the non-profit organization Junior Achievement.

Finance Park is a mobile program for middle school students. After a few preparatory lessons in the classroom, the students visit one of these mobile stations and a Capital One bank branch. Students are assigned a family situation (single, married, with or without children, etc.) and a job, and are faced with simulations requiring financial decisions that have consequences. Due to a lack of preparedness in real life, most people learn how to manage their money “on the job.” But even in real life, the consequences of poor financial decision-making can be somewhat removed from the decisions themselves. The distance between cause (overspending, for example) and effect (not being able to afford a house due to high debt levels, for example) are so separated that learning on the job isn’t always effective as quickly as it would need to be.

Simulations can bring the cause and effect relationship into focus.

Capital One’s presence is significant in this program. The official name of the initiative is the “Capital One Junior Achievement Finance Park” with the necessary trademark symbols. Corporate involvement doesn’t stop with Capital One. There are more co-branded programs which one might expect to see corporations training young consumers to be life-long customers, in New Jersey alone:

Elementary school grades

  • Our Nation® Sponsored by United Technologies
  • JA More than Money™ (After-school Program) Sponsored by HSBC

Middle school grades

  • JA Global Marketplace™ Sponsored by MasterCard Worldwide
  • JA Economics for Success™ Sponsored by the Allstate Foundation
  • JA America Works Sponsored by Pitney Bowes & The Literacy and Education Fund

High school grades

  • JA TITAN (Internet based) Sponsored by Oracle
  • JA Economics™ Sponsored by the MetLife Foundation
  • JA Exploring Economics™ Sponsored by the MetLife Foundation
  • JA Banks in Action™ Sponsored by the Citi Foundation
  • JA Business Ethics™ Sponsored by Deloitte
  • JA Careers with a Purpose™ Sponsored by HCA & John Templeton Foundation

Junior Achievement programs in other states have different partnerships.

Shareholders are often impressed with corporate involvement in positive social initiatives and happy when companies are beneficiaries of tax incentives for charitable spending. I am concerned about the effect of branding in education lessons for eighth-graders. Corporations should not be involved with the education of children, but these corporations have money to devote to programs like Finance Park. If it weren’t for corporate sponsorship, programs like these would likely not exist.

Corporations have been involved with public education since the 1920s, but the trend has increased in recent years. As the United States falls behind other countries in education, citizens look to blame this country’s public school system. We look to corporations that create charter schools as an alternative, with the idea that schools with a better funding source, corporate profits rather than taxpayer money, will help solve the educational crisis. Results show that charter schools have mixed results when compared with public schools.

The lessons in personal finance are important, so it’s a good thing that kids are getting the exposure to real-life simulations. Can it be done without corporate involvement and indelible branding at an impressionable age?

Photo: daveparker
Junior Achievement Finance Park, Stanford CREDO study

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Get to Work If You Want to Be Rich

This article was written by in Wealth and Affluence. 12 comments.

How much time do you spend in front of the television, socializing with friends, or watching movies? I freely admit that I spend too much time watching television. There are certain television programs that entertain me, and particularly during stressful times in my life, I need some type of outlet that makes me laugh, raising my spirits. As a single man living alone, I don’t have the opportunity right now to unwind at the end of the day by spending time with family.

This is, of course, an excuse or a rationalization of why I don’t just spend more time working. A new study, wherein the researchers’ intent was to reevaluate whether the consumption gap between the wealthy and the poor grew alongside the income gap between 1980 and 2010, also has indicated a correlation between education level and leisure time. The authors of the study then make the connection from education level to wealth, when asked by the Wall Street Journal.

Low-educated men saw their leisure hours grow to 39.1 hours in 2003-2007, from 36.6 hours in 1985. Highly-educated men saw their leisure hours shrink to 33.2 hours from 34.4 hours… Low-educated women saw their leisure time grow to 35.2 hours a week from 35 hours. High-educated women saw their leisure time decrease to 30.3 hours from 32.2 hours. Educated women, in other words, had the largest decline in leisure time of the four groups.

Movie marqueeThe higher a person’s level of education, the less time they spend on leisure activities like watching television, going out to see movies in a theater, socializing with friends, talking on the phone, and playing games. The study authors content that as unemployment has grown at a higher rate for lower-education individuals, that factor has contributed to about half of the change in leisure time for that segment of the sample.

How do we get from a measurement of education to a measurement of wealth? The study authors contend that education is a proxy for wealth, as level of education tends to correspond with income. There are probably some pieces missing in this leap from education to wealth in general, but if nothing else, a higher education opens more opportunities for traditional methods of earning income. (There are always counter-examples, with Ivy League dropouts forming companies that go onto being worth many billions of dollars, but that is exceedingly rare.)

No one is pointing to a causality — that working more and spending less time on leisure activities alone — will result in an increase of income. But if there is a correlation, it makes sense. There is, however, a perception that those at the top of the corporate ladder, earning more money, do not “work harder” than rank-and-file employees. On the job, employees during the grunt work may work just as hard or harder as an executive whose primary function seems to be attending meetings and farming out work to his or her underlings while consolidating reports and presenting reports to the Board of Directors, for example. This study doesn’t look at how hard one works at the workplace, but at how much leisure time is used outside of the office.

There is a message: get to work. Those with higher incomes spend less time on activities outside the office that aren’t productive. Family time is excluded, of course. Highly-educated individuals (who we’re assuming are also earning higher incomes) are more likely to spend time at home cooking and caring for children.

Do rich people work harder? Can less time wasted on leisure activities like watching television translate to higher income?

Photo: angeloangelo
Wall Street Journal, National Bureau of Economic Research

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The Over-Marketization of Social Behavior

This article was written by in Economics. 9 comments.

Do you reward your children with money for performing well in school? Do you use the promise of an allowance to ancourage appropriate behavior in the family? These are big issues, because they take appropriate behavior and can turn the incentive to financial gain. Children growing up believing that financial gain is the reward for correct social behavior rather than seeing the intrinsic benefit.

The idea that everything has a financial value seems to have become more prevalent over the last two decades, according to a new book. In What Money Can’t Buy: The Moral Limits of Markets by Michael J. Sandel, the author argues that our trend of attributing market thinking to an increasing array of behavior could be detrimental to society.

The book has not yet been released as of the time of writing this article, so I haven’t read it yet. A review in Fortune Magazine is inspiring me to pre-order the book before its release.

The author notes how Americans are now more comfortable with marketing or selling things they might have not in the past. Selling ad space on foreheads, accepting money for branded tattoos, and paying students for each book they read are a few examples of things that might have been unthinkable a few years ago. I would add that the pervasiveness of the Internet has made some of this possible, when it comes to selling ourselves. Through the democratized ability to self-publish, people can easily market themselves without much effort. If you get enough attention, some company also looking for attention would be happy to pay you to do something newsworthy, like slapping a brand on your car for a year.

With the popularity reality television, the idea that anyone can become famous — not just for fifteen minutes but for an entire television season — and wealthy (think: Kardashians) is enticing.

Here are some thoughts from the Fortune Magazine review of the book:

The price we pay for this behavior plays out in several ways, Sandel argues. First off, poorer people are impacted disproportionately by the commercialization of personal space. How many affluent people are lining up to turn their houses or bodies into billboards? In this way, the decision to sell isn’t necessarily as independent and free as it may look. In a society increasingly driven by financial power, moreover, the wealthy hold even better hands than they would otherwise. Why bother encouraging your kid to study hard if you can simply grease his path into Harvard or Yale with the promise of a massive donation?

The more emphasis we place on money in society, the more power society gives to those who have it. I don’t think that today’s plutocratic oligarchy is too much different than western society in most of recent history, however. Those with money have always had the power. We like to think of government in the United States as “of the people, for the people, by the people,” but the Founding Fathers were mostly wealthy and mostly represented the wealthy, though several did their best to be sympathetic to those who were not as fortunate.

It was difficult to leave all old-world philosophies behind; property owners were afforded more rights than those who did not own property. A subtle class distinction still persists between homeowners and renters today.

Political and societal power has always been focused on an elite group of people who have the most money. This is why social change — giving the right to vote to all adults rather than a select few, extending human rights to all citizens rather than a select few, etc. — is only successful through revolution. Those with power and money aren’t much interested in sharing.

At times, market principles put in place to make an altruistic act look even more attractive do just the opposite. Sandel cites the case of a small village in the Swiss mountains called Wolfenschiessen that was once a candidate to house a nuclear waste site. When surveyed by economists, a majority of residents said they’d accept the site as an act of civic duty. The economists then added money to the equation, offering the residents as much as $8,700 each to accept the waste site. At this point, support for the deal plummeted among the villagers. From their perspective, the cash turned a sacrifice for the greater good into a plain old bribe.

Money changes the equation, whether used to encourage someone to do the right thing — who then learns that doing the right thing should always be rewarded the compensation — or to encourage someone to do something that would otherwise give him or her pause.

Fortune Magazine laments that the book does not offer any alternatives for a way of living that does not suffer from over-commercialization. Were wealth not to provide an individual so much power, it couldn’t be used as an effective incentive for changing someone’s behavior. Is there a way for the United States to hold onto the capitalism that’s such an important piece of the success of its individuals and the nation as a whole while taking money out of the power equation?

Also, how far will you go for money? Everyone has his price. Would you sell your body parts? Your kidney for $1,000? Your foot for $100,000? Your arm for $1 million? Would you kill someone for $100,000? For $50 million? For $1 billion? Morals may stand in the way to an extent — but that extent is most likely broken at some level.

Fortune Magazine

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Do Multilingual Individuals Earn More Money?

This article was written by in Career and Work. 7 comments.

A recent article in the New York Times (linked below) synthesizes several studies about people who speak several languages fluently. I am relatively confident that the ability to converse in more than one language adds to your human capital, increasing the likelihood of earning more money over time. There are some surveys that show that bilingual individuals are valued as employees more than those who speak only one languages and are compensated accordingly, but I’m not aware of any research study that proves that learning a second language leads directly to higher income.

When a child learns to speak in a bilingual household, the brain receives more exercise in resolving internal conflicts. This is a relatively new discovery, as until recently scientists believed that a second language would cause interference and would harm children’s ability to successfully master the first language.

The benefits of learning to speak more than one languages fluently are not necessarily limited to the formative years. Adults can possibly benefit from learning a new language.

Bilingualism’s effects also extend into the twilight years. In a recent study of 44 elderly Spanish-English bilinguals, scientists led by the neuropsychologist Tamar Gollan of the University of California, San Diego, found that individuals with a higher degree of bilingualism — measured through a comparative evaluation of proficiency in each language — were more resistant than others to the onset of dementia and other symptoms of Alzheimer’s disease: the higher the degree of bilingualism, the later the age of onset.

One might take from this study the idea that those who are more resistant to brain deterioration could have more income-producing years. If bilingualism helps the brain stay competent longer, the result should be an increase in lifetime income. It has yet to be determined whether bilingualism or multilingualism can increase wealth or income by itself. According to Payscale, the data are inconclusive on this matter. There are several good signs, however, that multilingualism has the ability to open opportunities for growing wealth.

  • Speaking more than one language could present more job or career opportunities.
  • The act of multilingualism inspires the brain to do better work through improved cognitive ability and to work more efficiently.
  • Scientists claim that bilinguals are better multitaskers. I think the idea of multitasking is mostly a myth, and what we call multitasking is actually quick task-switching, but whatever the cognitive process is called, bilinguals excel.

I’m not bilingual, but I’d like to be. As a child and teen, I studied a variety of languages, including Latin, German, classical Greek, and Hebrew, but I never learned enough to be considered fluent by any stretch of the imagination. If I were to study a new language now, I wouldn’t do so with the goal of earning more money; I’m more interested in the ability to converse with more people and perhaps feel comfortable traveling.

Has speaking more than one language provided you any benefits, financial or otherwise?

NY Times

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The Cost of Raising a Child With Autism

by Flexo

A few years ago, I shared a statistic showing that it costs almost $200,000 to raise a child, from birth to age eighteen. If that weren’t enough of a financial burden, consider that one out of 88 children are now diagnosed with autism, according to the Centers for Disease Control and Prevention (source, pdf). Regardless ... Continue reading this article…

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Millennials Want to Be Rich More Than Anything

by Flexo
Dollar

Since 1966, the Higher Education Research Institute has been conducting a study of first-year college students to determine personal goals and values. This collection of data has offered research a chance to see how priorities change over the years, and there are striking generational differences in the results. Recent research at San Diego State University ... Continue reading this article…

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Should the Government Ban Banks’ Payday Loans?

by Flexo
Check

When we think of predatory lending practices, the first thought that often comes to mind is the payday loan industry, catering to people barely, if at all, living paycheck to paycheck. Payday loans service communities with an aversion or without a need for or trust of the mainstream financial industry. Offering short-term loans designed to ... Continue reading this article…

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High I.Q. Scores Correlate to Better Investments

by Flexo
Brain

In Finland, all young men are required to spend some time in the military. Finland also has a wealth tax, requiring citizens to report their investments to the government. As a result, researchers from the University of California, Los Angeles, Aalto University, and the University of Chicago have discovered data worth studying. Because all military ... Continue reading this article…

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