There is nothing like an economy in crisis to concentrate the mind. Served up by the meltdown in banking and finance: a teaching moment for financial literacy among our young.
The October 17 edition of Business Lexington, reported on the introduction to Fayette County Public Schools of financial literacy curriculum developed by Junior Achievement and taught by volunteer professionals recruited from the local business community. For this followup installment, Martin interviewed Jan Mester, President of the Kentucky Council on Economic Education (KCEE) and Martin Kish, Vice President for Marketing and Communications of the Kentucky Association of Manufacturers (KAM). KCEE helps schools (K-16) integrate the teaching of economics and personal finance across the curriculum. The organization is a partner in the Kentucky Association of Manufacturer's "Smart Kentucky" initiative. Mr. Kish represents KAM on the board of the Kentucky Council on Economic Education.
Jan Mester
TM: We have a crisis at hand. Can you tell us how financial literacy might play a role in better preparing us in the future?
JM: ... It would be very easy to say 'okay consumers, you all really messed up.' But instead we want to say, 'consumers use your head, pay yourself first, make better choices, understand that you've got to spend less than you earn.' We really are trying to promote common sense economics and personal financial literacy - - that everyone has to be smarter. It's very obvious that some bad choices and decisions were made. I don't think it was meant to cause anyone harm. I just think people were not aware and I think that's the scary thing. We've got to make certain that families and our young people who will be our future business and community leaders do understand about how to save, budget, build assets and make better choices so this sort of situation won't continue to occur and take years for young people to overcome.
TM: For several generations now we've been fairly bombarded with the idea that more is better. Has this crisis brought us to some sort of tipping point?
JM: I definitely think that's true. I think the tipping point that we see is: the only way out of this situation is through education. The only way to get back on track and to make sure that these mistakes or these bad choices aren't made over and over again is to begin to educate people to understand credit and how to use it correctly. To understand about delayed gratification, you know it's not always about impulsive and compulsive spending and I think that if you just chastise people they're no better off. So the Council on Economic Education is trying to provide information and tools so that families are smarter; they're talking to their kids about money; teens are smarter when they are bombarded with credit card offers and people begin to understand it's not rocket science. It's a way of looking at how to make choices, using resources efficiently and making sure that they can build a foundation for financial success and productive living.
TM: What can be done to bring financial literacy into the classroom?
JM: We don't necessarily want to mandate. What we want is to enable teachers to teach personal finance with mathematics, to teach personal finance and economics with literature through geography and science with the environment. We can't keep tacking on one more thing for teachers to do. That's not fair. But do I think that kids should have some exposure ... we do them a grave disservice if we graduate these young people and they're really not prepared for the everyday business of life.
Martin Kish
TM: Tell us about the partnership between your organizations.
MK: Jan and I have been collaborating on how we can bring these lessons that are being taught in the schools through her organization to the factory floor. We've got to figure out a way to do that because our factory workers make good money - - $45,000 a year on average per capita and Kentucky is only about $30,000. So it doesn't really matter how much money you make, you can make bad financial choices whether you're a $45,000 a year factory worker, which is a good wage, or a $250,000 executive or business owner.
TM: Economic health and well-being in the nation and in the economy is an obvious concern of manufacturing. But how does financial literacy play a role in workplace well-being?
MK: Number one, we are the driver of the Kentucky economy; we're the number one producer of the state GDP. As manufacturing goes, so goes the state's economy. So this whole issue is very, very critical to the future of manufacturing in the state. This relates to the workplace in two ways. One is the ownership of the businesses and how they have run their businesses, the manufacturing businesses of the state, up to this point. Have they been over extending their credit? Have they recklessly invested in capital projects that might not be paying off right now? Could they have invested their capital more wisely? And it also gets down to the worker level because how these owners or managers have run their manufacturing facilities is going to impact workers.
TM: Are you aware of companies offering financial literacy programs to their employees?
MK: The answer is: some are, many aren't. We need to get all of them doing it. And is that a big goal? Of course it is. If we don't get that done we're going to be in big trouble. When employees are stressed out - - worried about possible bankruptcy, worried about just paying their next mortgage, productivity suffers. This is of keen interest to us now because we are in a global economy. This economy, we believe, will bounce back and we have to be competitive which means we must out-produce the rest of the world because we pay higher wages in America. And to do that we have to have our workers focused on what they are doing in front of them rather than worrying what's going on in their checkbooks.