Adding Up the Benefits of Financial Literacy

With so many Americans saving little and spending a lot, financial literacy is a critical skill. The Foundation of Investor Education offers multiple resources for teaching students about saving and investing, including the popular Stock Market Game. Included: Examples of lessons about budgeting, investing.

The low level of personal savings and high level of debt among Americans has raised concerns among national leaders about the need for more financial education, and the U.S. Congress has designated April Financial Literacy Month.

One source of financial literacy education is the Foundation of Investor Education, a nonprofit affiliate of the Securities Industry Association (SIA). The foundation offers resources for teaching about investing and finances.

The Foundation for Investor Education was formed in 2003 and incorporates SIA's investor education program, which until 2003 had been housed within the association itself, and The Stock Market Game Program, which had been offered by the Securities Industry Foundation for Economic Education (SIFEE). The Foundation for Investor Education replaced SIFEE and carried on SIFEE's activities.

Introduced in 1977, The Stock Market Game was the first educational stock market simulation, and now has reached more than 9 million students, making it the most widely used program of its kind. In The Stock Market Game, students "invest" a hypothetical $100,000 in a portfolio and chart their gains and losses.

The foundation also has developed the Path To Investing, an objective financial education source with information for adults and students.

Donna C. Peterman

Donna C. Peterman, chairwoman of the Foundation for Investor Education and senior vice president of PNC Financial Services Group, talked with Education World about the foundation's mission, and how it is helping students become more financially literate.

Education World: What resources do you have for teachers?

Donna C. Peterman: Working with teachers is at the heart of our mission and remains the focus of our efforts. The Stock Market Game Program itself is a teaching resource. It integrates a real-life, "hands on" learning experience with mathematics, social studies, and language arts. Teachers using the program tell us that it's a fun and engaging classroom tool that complements the subjects they already cover. More importantly, it helps them meet curriculum standards. This year, half a million students in grades 4 to 12 are using our interactive, Web-based program to learn how to save and invest, and much more.

Teachers tell us that the program helps their students learn about our nation's economic system in an exciting, hands-on way. It brings abstract concepts to life. We incorporate teacher feedback into our program to keep it vibrant and responsive to their needs.

We are developing new curriculum now, which will be ready for the fall semester. We are constantly developing new support materials for teachers and we are making plans for national baseline research to better measure how students are learning through the program.

We also provide extensive teacher support. Professional development training and workshops are available through local organizations in all 50 states. The grade-level-appropriate curriculum program includes student newsletters, which focus on current events and relevant topics, and are delivered to teachers throughout the school year.

In many locations schools have partnerships with a local newspaper, which provides classroom subscriptions to enhance the program. Each semester, teachers and students also have the opportunity to participate in "InvestWrite," a national essay contest that extends the Stock Market Game to include writing and advanced critical thinking skills. The competition offers awards and recognition for teachers, their students, and schools.

EW: Why is teaching financial literacy and investor education so important?

Peterman: To me, it's as important as teaching other fundamentals such as "brushing twice a day" or "looking both ways before you cross the street." On a personal level, learning basic skills about money management can influence how far we go in life. It's integral to achieving aspirations from paying for a college education, to buying a home, or starting a business. We all have financial responsibilities. The art is in how we manage them. Knowing more enables you to do more. I truly believe that earning is tied to learning. The more educated we are about successfully managing a checking account, a 401 (k), financing a loan, or investing -- the more we improve our own lives and also the more we contribute to the overall economic health and wealth of our nation.

The new reality is that the majority of people these days need to save for their own retirementessentially turning employees into pension managers. Are we ready to assume these kinds of new responsibilities? As importantly, will the millions of young citizens preparing to enter the workforce be ready?

Polling data and focus group studies consistently show that people have an appetite -- an intellectual curiosity -- for more "investor and financial" learning materials. We hear them. That's why the foundation created the Path To Investing. It's an award-winning educational resource, which contains high quality, objective content created by leading academic and industry experts. It has a robust section on thinking about and planning for retirement. We recently added a financial planning tutorial to help walk readers step-by-step through the process.

EW: What are some easy ways to integrate financial literacy lessons into an elementary school curriculum?

Peterman: Many schools systems find that integrated learning achieves the best student results and look for integrated curriculum to help accomplish this. The Stock Market Game is one of the best approaches to integrated learning available.

We provide teachers with grade level and subject specific lesson plans. For example, many elementary Stock Market Game teachers use our "Math Behind the Market" segment to present lessons within the context of mathematical concepts. Through it, students learn about addition, subtraction, percentage change, and decimals through real life examples. Here's how: To determine why a certain stock performs the way it does or why the market has gone up or down, they have to understand how the economy works. To calculate their returns, they have to do the math.

Math is just the beginning of the integrated approach. To build a stock portfolio, students have to research and evaluate choices, and make decisions based on what they've learned. Student critical thinking is also developed, while cooperative learning and communication skills are required as students work in teams to develop portfolios and make investing decisions.

Reading skills are enhanced as students research companies and products in the newspaper or on the Web and participation in the essay portion of the program addresses writing and language skills. Social studies and economic concepts also can be taught across all grade levels.

Nine out of ten teachers tell us that the Stock Market Game Program greatly increases their own understanding of the stock market. They also tell us that by working in teams, the students learn about negotiation, sharing, patience, and courtesy. The students love the thrill of the competition. So teachers also tell us that they have seen attendance records improve as well.

EW: What are some of the biggest obstacles to teaching financial literacy in schools?

Peterman: Time. The school day is only so long and there is so much to accomplish. We understand how pressed for time teachers feel in their classroom. The twin challenges of meeting standards and testing requirements make it even more important that teachers have tools to help get the most out of time with their students. The Stock Market Game program is designed to integrate into existing subjects and assist in meeting education requirements, especially in the context of the No Child Left Behind Act. The program also is correlated to the National Standards in economics, mathematics, and business education, and to many state and district standards across the country, as well. By 2007 the program will be correlated to standards of learning in all 50 states.

EW: What are some common misperceptions people have about investing?

Peterman: Most people either think that investing is too hard, or simply "it's just not for me" because, "I just don't have or make the kind of money it takes to invest." It's easier than you think -- I'll get to that in a minute. More people are investing than you think. Half of U.S. households (57 million) and one in three people own stock, according to a recent study co-authored by the Securities Industry Association. Just think about it, nearly three times as many households own stock as tune in for the wildly popular show American Idol (21 million) -- and four times as many people own stocks as own an iPod (22 million), a modern day status symbol. That same SIA study shows that investors tend to be middle-aged (51 years old), with moderate household incomes ($65,000), married, college educated, and saving for retirement.

We know that for many the thought of investing can seem daunting. Again, that's why Path To Investing is the place to explore and learn. There's even a simulated real-time investment exercise that users can try.

EW: What do you think is behind the record-low level of savings among the American public?

Peterman: The fact that the U.S. lags behind other parts of the world when it comes to saving is a matter of concern to us at the foundation. I believe that learning to save is essential to being a responsible adult. The best time to educate people about this is when they are young. For nearly 30 years, the Stock Market Game Program, in partnership with America's teachers, has worked diligently to instill discipline in children to do that. As a result, over time I believe we will see generational change. We also know adults seek information, too. The new Path To Investing financial planning tutorial, that I mentioned earlier, can help determine a strategy to accomplish financial goals. Is there a better role for a foundation than helping learners of all ages realize their aspirations?

This e-interview with Donna C. Peterman is part of the Education World Wire Side Chat series. Click here to see other articles in the series.

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Article by Ellen R. Delisio
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Copyright © 2006 Education World

04/04/2015