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HSFPP Update # 203—Latest Jump$tart Survey Shows Students Are Financially Illiterate; High School Financial Planning Program Just Might Be the Solution

Message from Flashman: This is our last financial lesson for the 2007–2008 school year. However, we need your help to bring Kentucky’s award-winning High School Financial Planning Program to more teens. If you are a Family & Consumer Sciences teacher, please let teachers in other disciplines know about the weekly financial lessons you receive from our listserv. If you are on our listserv to receive these weekly updates, please let your Family & Consumer Sciences teacher or other teachers know about the revised HSFPP program, which provides a teacher manual, as well as a free 120-page workbook for every teen in the course.

To order HSFPP materials for your classes or 4-H club, go to the following page of NEFE’s Web site and register as a user; and from there you can order materials:

http://hsfpp.nefe.org/instructors/10.cfm?pathinfo=/instructors/index2.cfm&deptid=22

It will take 5 to 10 business days to get you registered; and it could take about 4 to 6 weeks after you order student workbooks for you to receive student and teacher materials, so order early to make sure you have them for the fall.

Information for Teachers:

Correct Answers to Pre-Test Activity.

1-B; 2-A; 3-C; 4-A; 5-C

6-D; 7-C; 8-A; 9-A; 10-D

I would appreciate it if you would send your class results to me at the following address:

Robert H. Flashman
Family & Consumer Sciences
303 Funkhouser Bldg.
University of Kentucky
Lexington, KY 40506-0054

Thank you!

 

Academic Expectations:

Academic Expectation 2.13
Students understand and appropriately use statistics and probability.
Unit 2-6

Academic Expectation 2.18
Students understand economic principles and are able to make economic decisions that have consequences in daily living

Academic Expectation 2.29
Students demonstrate skills that promote individual well-being and healthy family relationships.
(Program material addresses risky behavior and its impact on teens)

 

Web Site Picks of the Week:

A copy of the complete survey is posted on the Jump$tart Coalition’s Web site at www.jumpstart.org in the “Downloads” section.

 

In the New$... Latest Jump$tart Survey Shows Students Are Still Financially Illiterate

by Mark Oleson, Ph.D., University of Missouri Financial Counseling Clinic

“If you were unimpressed by the failing grade posted for the financial literacy scores measured in a 2006 national survey of High School seniors (52%), you're not likely to be inspired by the most recent report released this month detailing the 2008 results ...

“In the Jump$tart Coalition biennial survey, students correctly answered only 48% of the questions. The overall conclusion isn't a reach. ‘Graduating high school seniors continue to struggle with financial literacy basics.’ This year did mark the first time college students were involved with the survey. While college students did better overall, 62%, results are still miserable. Not surprisingly, scores increased with rank in school:

“Freshmen - 59%
Sophomore - 61%
Junior - 62%
Senior - 65%

“While you can download the detailed results of the survey at http://www.jumpstart.org, some scary findings were summarized:
- “55% of students were unaware they could lose their health insurance if their parents became unemployed.
- “Only 17% correctly answered that stocks would most likely yield higher returns than savings bonds, savings accounts, and checking accounts over the next 18 years.
- “Only 48% knew that a credit card holder that paid only the minimum due on their balance would pay more in annual finance charges than a cardholder that pays the balance in full monthly.”

Source: Mark Oleson, “Financial Tip of the Week: Financial Illiteracy Continues,” April 21, 2008.

 

Pre-Test Activity:

1. If each of the following persons had the same amount of take home pay, who would need the greatest amount of life insurance?

a) a young single woman without children
b) a young single woman with two young children
c) a young married man without children
d) an elderly retired man, with a wife who is also retired

2. Kevin has saved $9,000 for his college expenses by working part-time. He plans to start college next year and needs all of the money he saved. Which of the following is the safest place for his college money?

a) a bank savings account
b) corporate bonds
c) stocks
d) locked in his closet at home

 

3. Your take-home pay from your job is less than the total amount you earn. Which of the following best describes what is taken out of your total pay?

a) federal income tax, property tax, and Medicare and Social Security contributions
b) Social Security and Medicare contributions
c) federal income tax, Social Security and Medicare contributions
d) federal income tax, sales tax, and Social Security contributions

 

4. Which of the following credit card users is likely to pay the GREATEST dollar amount in finance charges per year if they all charge the same amount per year on their cards?

a) Paula who only pays the minimum amount each month
b) Ellen who always pays off her credit card bill in full shortly after she receives it.
c) Barbara, who generally pays off her credit card in full but occasionally will pay the minimum when she is short of cash.
d) Nancy, who pays at least the minimum amount each month and more when she has the money.

 

5. Which of the following statements is true?

a) if you missed a payment more than 2 years ago, it cannot be considered in a loan decision
b) people have so many loans it is very unlikely that one bank will know your history with another bank
c) banks and other lenders share the credit history of their borrowers with each other and are likely to know of any loan payments that you have missed
d) your bad loan payment record with one bank will not be considered if you apply to another bank for a loan

 

6. Ed and Bob are young men. Each has a good credit history. They work at the same company and make approximately the same salary. Ed has borrowed $2,500 to take a foreign vacation. Bob has borrowed $2,500 to buy a car. Who is likely to pay the lowest finance charge?

a) they will both pay the same because the rate is set by law
b) they will both pay the same because they have almost identical financial background
c) Ed will pay less because people who travel overseas are better risks
d) Bob will pay less because the car is collateral for the loan

 

7. Ron and Molly are the same age. At age 25, Rob began saving $2,000 a year while Molly saved nothing. At age 50, Molly realized that she needed money for retirement and started saving $4,000 per year while Rob kept saving his $2,000. Now they are both 75 years old. Who has the most money in his or her retirement account?

a) Molly, because she saved more each year
b) Ron, because he has put away more money
c) Ron, because his money has grown for a longer time at compound interest
d) they would each have the same amount because they put away exactly the same

 

8. If you have caused an accident, which type of automobile insurance would cover damage to your own car?

a) collision
b) liability
c) term
d) comprehensive

 

9. Marie has just applied for a credit card. She is an 18-year-old high school graduate with few valuable possessions and no credit history. If Maria is granted a credit card, which of the following is the most likely way that the credit card company will reduce ITS risk?

a) it will start Marie out with a small line of credit to see how she handles the account
b) it will charge Marie twice the finance charge rate it charges older cardholders
c) it will require Marie to have both parents co-sign for the card
d) it will make Marie’s parents pledge their home to repay Maria's credit card debt.

 

10. Under which of the following circumstances would it be financially beneficial to you to borrow money to buy something now and repay it with future income?

a) when the interest on the loan is greater than the interest you get on your savings
b) when some clothes you like go on sale
c) when you really need a two-week vacation
d) when you need to buy a car to get a much better-paying job

 

Source: Jump$tart Coalition

 

Kentucky High School Financial Planning Program

http://www.ca.uky.edu/fcs/hsfp

The purpose of the HSFPP financial updates, video lessons, and Web site is to assist county Extension agents, credit union educators, high school teachers, and parents who home school their teenagers so that they may improve the economic well-being of our teenagers; and also to show educators how the HSFPP, updates, and video lessons meet Kentucky core concepts. The Web site, updates, and video lessons are provided by the University of Kentucky Cooperative Extension Service, and are free to all educators. The list of core concepts and order form for free program materials including the student guide and instructors manual can be found on the Kentucky HSFPP home page.

If you are not already on our listserv:

The video lessons are available only to members of our listserv and will not be posted to the HSFPP Web site because of the timeliness of the information. If you would like to receive our video lessons, which are sent to our listserv biweekly, on alternate weeks from these updates, please sign up at the following page of our Web site: http://www.ca.uky.edu/fcs/HSFP/response.htm