Why aren't more of us proficient in financial literacy? Stark State prof explains
Charita M. Goshay, Canton Repository
6 min read
Roy Baker Jr.
JACKSON TWP. − Roy Baker Jr. grew up in a family who lived from paycheck to paycheck.
"I was raised in a financially illiterate household, and my entire working life before teaching was spent working around those who had financial difficulties," he said. "I have firsthand experience about the danger of not being educated financially."
A certified public accountant and adjunct professor at Stark State College, Baker also teaches financial literacy to high schoolers through the Upward Bound summer program.
He fully supports a recent state mandate requiring all high school students take a stand-alone financial literacy class.
In 2022, Ohio became one of 26 states to require the class.
"Having worked with high school students and college students alike, I’ve seen firsthand how financial literacy transforms lives, especially for those like me who came from financially illiterate households," Baker said. "I also spent many years working in an industry serving those struggling with money management. From both perspectives, the value and impact of financial education are undeniable. There will be positive effects of this mandate that we should see in the coming years."
The Canton Repository asked Baker about financial literacy. Here's the Q&A:
Why is mandating financial literacy more effective?
In my own research, conducted alongside Dr. Jack Dorminey of West Virginia University, we evaluated the effects of several financial literacy treatments: Offering of a class but not requiring it; a required class that could be integrated into another class, like economics, and a stand-alone class that could not be integrated another class.
We used these treatments on several economic outcomes: credit card delinquencies; automobile loan delinquencies; mortgage delinquencies, and foreclosures. We did this across all 50 states. Interestingly, only a stand-alone financial literacy class had a significant impact on outcomes. This suggests that Ohio made the right decision in mandating stand-alone courses, but it also raises concerns about how those courses are being delivered.
What are some of your concerns?
A notable concern is the timing of the course. Some districts are introducing financial literacy in the ninth grade. Based on teaching experience across various grade levels, ninth graders may not possess the maturity or life experience to fully grasp complex financial concepts such as credit, debt and insurance. ...
Teaching these principles too early can lead to "knowledge decay," reducing the program's effectiveness. Positioning the course in 11th or 12th grade may enhance its relevance and applicability, aligning instruction with students' imminent financial decisions.
Starting with the 2024-2025 school year, educators teaching the mandated financial literacy course must obtain a specific financial literacy licensure validation. However, teachers licensed in social studies, family and consumer sciences, mathematics, or business education for grades 9-12 are exempt from this additional validation.
This exemption raises questions about whether these educators receive sufficient training in personal finance topics during their initial certification. While their backgrounds provide a foundational understanding, the depth and breadth of financial literacy education may vary.
Ohio gives $500 per educator (for training), so it gives them a bit of a foundation to be able to teach it. What I'm hoping is that there's ongoing training in preparation, not just one time, but continuing education. What I would hope to see is more emphasis on teacher training and education to make sure that we're not just going through the motions. ... Well-funded teacher preparation may be key to successfully implementing financial education programs.
Why aren't more of us proficient in financial literacy?
It really comes down to education. In my opinion, if it's not taught at home, it's got to be taught somewhere else.
I'm a pretty good example because I did come from a financially illiterate family. I'm very fortunate that I learned some life lessons early on. But what about students who don't get it at home? Isn't it right that we provide that to them through the school system so that we can educate them on making better financial decisions?
Because whether we think about it or not, we make financial decisions almost every single day. Well, financial literacy is a part of it. Every time we make it a decision on whether to spend money, or whether we want to save money, or we're looking for an automobile, or we're talking about life insurance, it's a part of our everyday life, so we have to be educated.
What skills can be gained from a financial literacy classes?
People have to understand how money works. So, it's important to go out there and do research. If you're looking to buy a car, go out and research. Prices are research. What the interest rate is, is research. If you're looking to invest, research. Are you a conservative investor? Are you an aggressive investor? Do you understand the difference between saving and investing?
Because just putting money in a savings account, does you no good. There's a next-to-zero return on a savings account. It's important that we don't just go through the motions as consumers. We have to be educated because if we're not, guess what? All of the people who are trying to sell us products, their goal is to make the most money possible.
So, we have to take care of ourselves. Nobody else is going to look out for our best interests.
What are some immediate steps anyone can take to improve their finances?
Get educated. You know that the old saying, 'You don't know what you don't know, until you don't know it.' A lot of people don't know what they don't know.
When I always start out with a new class or new workshop or anything, the first thing is budgeting. That's because that's where it all starts. We have to know how much are we bringing in. What are our expenses? I hear a lot of people say that they miss paying their electric bill because they didn't get a statement and they didn't know they missed it. Well, that should never happen. We should have a budget that lays out when our bills are due, and how much they are.
When we're talking about financial literacy, it's all encompassing; it really is. It's savings; it's setting up investing and automobile Insurance. These are all real skills that students are going to need to know when they go out into the real world.
If they have a great foundation, if they have a great family life and the parents are aware of all these things, that's wonderful, but a lot of kids don't have that at home, and so it's important that we give them kind of a well-rounded foundation.
