MONEY MATTERS: District adds financial literacy requirement

WASILLA — How many 16-year-olds can give an informed opinion on whether stocks, bonds or mutual funds are a better investment? How many would you trust with a credit card or ask to help develop a plan for getting out of debt?

Starting next year, high school students across the Mat-Su Borough School District will be expected to be financially literate before graduation. They’ll learn about budgeting, investments and debt, along with many other money-related matters.

Personal finance classes are already taught as an elective in several classrooms across the district, including in Mat-Su Career and Tech High School teacher Chris Taylor’s class. Taylor has an undergraduate degree in finance and teaches other courses on construction, drafting and industrial safety.

He tells his finance students on the first day of school that the class is going to be one of the most important of their high school careers.

“I feel we do such a great job, especially in our district, of preparing students for careers in trades or (professional careers). But we don’t ever teach them what to do with that money once they make it,” he said.

Until now, that is.

On a recent Thursday, Taylor’s students sat at desks outfitted with computer monitors and listened as Edward Jones Investments financial adviser Rob Sande gave an overview of investing terms.

Sande outlined key features of stocks, bonds and mutual funds and encouraged students to start building their investments early. Open an Individual Retirement Agreement, or IRA, as soon as they have a job, for example. Start setting aside money now and it won’t be so painful to build up a retirement account down the road, he said.

Sande, who said he has a passion for helping young people learn about investing, got students involved in the discussion. He cautioned them to avoid the scenario he sees most often: “The one common theme in the business is that, at about age 40, people panic.”

While contributing $100 a month over the course of 40 years will build up a nicely sized retirement account, the people Sande referred to have generally not been contributing regularly to a retirement account. When they decide they should be, and tell him they’d like to retire at age 59 and live on $6,000 a month, they have to face a harsh reality, he said.

“All of a sudden that $100 a month (to meet retirement goals) becomes $4,000 a month,” he said.

That’s one scenario the class is set up to prevent. School district officials hope that by providing students with a working knowledge of finances before they go out on their own, they will make better decisions and avoid the pitfalls of debt and lack of savings that Americans have become known for recently.

That’s where Helen Munoz comes in. Munoz, an 80-year-old dynamo, has been petitioning the local school board for several years to make financial courses a requirement for graduation.

“If you don’t start with training the young ones and having them be self-sufficient in this next generation, where does it leave this country?” she asked.

When former Mat-Su schools superintendent Dr. Kenneth Burnley arrived in the Valley, Munoz met with him to discuss financial literacy courses. Burnley agreed financial knowledge is essential for students on their way out of high school.

Dr. Deena Paramo, current Mat-Su School superintendent, said Burnley and the past school board both favored the idea, but it took a school schedule change to make it happen. High schools across the district recently went from six to seven periods. That made it possible to add the financial literacy courses, along with an accompanying civics course — also required for 2015 graduates — without having to drop other courses or add teachers.

Munoz has no plans to rest on her laurels now. She wants credit unions in the state to take up the charge and make financial literacy a mandatory subject statewide. Ideally, she said, she’d like to see it required nationwide.

Paramo said financial learning hasn’t been absent from the curriculum. Elementary and middle schools partner with Junior Achievement of Alaska Inc., a group that uses community volunteers to help prepare students for the workplace and show them how to generate and manage wealth.

The information in the personal finance classes is more specific. Students learn to write checks and keep a check register and how to use an envelope system for budgeting (keep cash envelopes designated for each budget section and when it’s gone, it’s gone). Taylor generally brings in a staff member from Career and Tech High School to talk about his or her financial situation — how much debt they have, what assets they have, sources of income, etc. Students work in teams and develop plans for the staff member to get out of debt. There’s a good incentive to make a good plan — the group with the winning plan gets to skip the final, he said.

But some topics are a little tricky. Taylor advocates avoiding debt for depreciating assets — don’t buy a giant television or a couch at a rent-to-own place, for example. But what about student loans, which Forbes recently said could be the next American financial crisis? Taylor’s students are mostly juniors and seniors, getting ready to head to trade school or college.

“It’s the one cost where I’m OK (with them) obtaining debt. By all means, you should take every step necessary not to incur student loan debt,” he said. “But it’s still an incredibly valuable investment with an incredible return.”