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Investing in Girls: Financial Literacy

April is Financial Literacy Month, and despite all the attention financial literacy has received in recent years, studies still show that Americans are poorly educated when it comes to managing money. Since 2/3 of the GDP is consumption, we would benefit greatly from financially literate consumers as a nation, especially women. Women are nearly 50% of the workforce, run household finances and are the sole earners for 40% of households with children under 18 today, compared to 11% in 1960.

Yet, studies show women avoid risk and lack confidence in making financial decisions. That’s why Girls Inc. of New York City teamed up with author Brian Weisfeld, who wrote the book The Startup Squad to teach girls basic concepts in entrepreneurship: marketing, sales and money. Together we launched the 100Inspiring100 campaign aimed at seeking 100 women leaders to purchase copies of the Start-Up Squad for our girls. Learn more here!

Forbes magazine executive editor Brett Nelson called financial illiteracy among teens in general “nothing short of a travesty.” CNBC reported that in the first large-scale international study of 15-year-old students' financial literacy skills released last summer, the U.S. ranked 12th. out of 18 countries participating.

Promoting financial education and a positive relationship with money among our youth, especially girls, is essential to ensuring a population capable of making informed financial decisions. But, adults aren't doing much better. In a Retirement Income Literacy Survey conducted for The American College of Financial Services last year, 80% of the respondents received scores of 60 or lower on financial questions about retirement and just 20% received a passing score. Studies show that during the recent financial crisis, many who took out interest only loans were not aware that their payments did not apply to the principal of the loan. If you want to see how you fare, take the Wall Street Journal’s Financial Literacy Quiz!

Starting financial education as early as possible is Girls Inc. of New York City’s mantra. A focused, age appropriate curriculum and qualified instructorsteaches girls:

1- To open/manage a bank account. Girls open a savings account at their local bank, some of which offer special accounts for young people and/or require only a small opening deposit. Even at 1% interest, when girls watch their $50 turn into $50.50 a year later, they make the connection: money saved or invested grows and multiplies.

2- To practice saving and wise spending, for instance, learning the difference between wants and needs. With either money in their pocket or the potential to make it, girls practice saving and spending as a team and learn about making intelligent buying decisions and the consequences of overspending. They also learn to save: they put away 10% of their allowances or income. Once they see results they say “what about 20%?” It adds up, whether they’re saving for an iPhone or for college.

3-To make wise investments. In our investment challenge, girls received $50,000 in real dollars to invest. They were coached, but made their own investment decisions. At the end of the year, their return was an extraordinary 54%!

The consequences of financial illiteracy are hard to ignore:

  • Individuals with lower financial literacy are significantly more likely to use high-cost methods of borrowing and are far less prepared to deal with financial emergencies.

  • High school students who did not receive financial education have lower savings later in life.

  • A USA Todaystudy found that college students who didn’t receive any financial education in high school were less responsible with credit cards than those who did.

In general, high school is where financial literacy programs are taught. But studies have found that the retention rate on financial lessons learned is two years at best. Along these lines, a Girls Inc. of New York City alumna recently suggested we offer a Financial Literacy Bootcamp for Girls Inc. alums during their freshmen year of college. “We need reinforcement and new lessons that fit our new life situation,” she commented.

Financial literacy for girls is an important foundation in their education. But changing girls’ attitudes, mindset and behaviors about money and wealth, especially for girls who grow up in poverty, is just as important in order to be successful. Replacing attitudes of fear with the idea that “money is your friend and will do what you tell it to do.” Financial literacy is a continuous process, it’s not one course, it’s not one topic; it’s an ongoing, lifelong undertaking. It’s important for everyone; for girls and women it’s essential.


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