Indiana University prepared a paper titled “The Effectiveness of Youth Financial Education: A Review of the Literature” in 2008, which summarized what is known about the effectiveness of financial education. The comprehensive study shows that rather than introduce financial education in middle or high school, financial education should be introduced early and continue throughout the K-12 setting; that financial education must demonstrate relevance to students in order to engage their motivation; and, that beyond teaching students to handle their cash, financial education must be designed to forge understandings of the relationships among money, work, investments, credit, bill payment, retirement planning, taxes, and so forth.
It’s the relevant and direct application of financial knowledge to build personal plans that truly resonates for them, that makes it “stick.” In YLA, participants learn the language of personal finance, including the definitions of principal, interest, income and expense. They see how delaying gratification can build savings so that they can make purchases without incurring debt. They chart how much debt costs, and they begin to think critically about the benefits and liabilities of lending, careful to understand who is making money. They learn to distinguish between durable and non-durable items and understand the significance of having and maintaining good credit. They begin to understand net value, accumulating and leveraging assets, and how simple financial steps can change the course of their lives. Mostly, they begin to see how a simple, well-informed plan can actualize a dream.
Participants create their own financial plans by projecting monthly income and expenses and keep track of actual spending. They play interactive games and engage in activities that show the immediate and far-reaching impact of their decision-making; they analyze their process, their motives, and their expectations. Participants build skills to make a plan toward almost any simulated financial goal, using variables of time, resources, and financial tools.
YLA’s financial literacy and youth development program has been recognized by the Wells Fargo Foundation as a successful program for teaching students how to create and manage a budget, understand credit, and save for the future. (2012)