AUGUSTA, Maine — More than 150 educators from around the state gathered in Augusta Friday for a daylong workshop on how to better prepare students for the complex financial world that awaits them after graduation.
The purpose of Friday’s “Financial Literacy Summit” was to give teachers ideas about how to incorporate in their classroom lessons on personal economics, whether understanding interest rates or the importance of financial planning even for middle school students and teenagers.
Organized by the Maine Office of Securities and the Maine Jump$tart Coalition for Personal Financial Literacy, the summit is part of a growing national recognition that today’s schools have obligations to students beyond providing them with a sound education in reading, writing and arithmetic.
The event’s keynote speaker, Jeanne Hogarth with the Federal Reserve Board in Washington, D.C., said Maine is already well positioned to lead in the area of financial literacy.
Hogarth said the state’s first-in-the-nation school laptop program and the $500 scholarship awarded to every newborn in Maine — courtesy of the Alfond Scholarship Foundation — are perfect financial literacy teaching tools.
“I want to give a shout-out to Maine. You guys are doing some really amazing things,” said Hogarth, who heads the Federal Reserve’s consumer education and research section.
Teachers could use that $500 scholarship to illustrate how savings — even a small amount — multiply over the years, especially if the family contributes additional money, she said.
Hogarth said the recent credit card reform law enacted by Congress provides another valuable tool to help students understand the risks of credit debt.
As an example, she displayed a copy of the new credit card statements required under the law that show that it would take 18 years to pay off a $3,000 balance on a card with an interest rate of roughly 15 percent if the consumer only made the minimum payment.
By the time the original balance is eliminated, the consumer would have paid $6,500 — a figure that made many of the teachers in the room gasp.
Hogarth said teachers should also be discussing subjects like the finances behind buying a car or a house — two areas that she said many adults do not adequately understand.
“People shop [around] more for their televisions than for their mortgages,” she said. “And the big lie is the most expensive thing people own is their home. No, the most expensive thing people own is their mortgage.”
Former Gov. Angus King said Americans today are awash in financial terms and jargon — such as variable interest rates, credit default swaps and APR — but rarely stop to think what that sounds like to a 12- or 13-year-old. That is where financial literacy education can come in, he told the group.
“From the point of view of individual survival, this is essential,” King said.
William Olsen Jr., vice president of Bangor Savings Bank and the chairman of the Maine Jump$tart Coalition, said he and others hope to start “financial literacy fairs” around the state to help educate students and their parents. Bangor Savings Bank was a sponsor of Friday’s summit.
The key, Olsen said in an interview, is to begin financial literacy and planning at a young age, not when the high school senior is struggling to find a way to pay for college. And financial literacy needs to take place at home, he said.
“I don’t want to see financial education only be in the schools,” said Olsen. “We have to get parents involved. They need to talk about money with their kids.”