• Crunched by numbers
    May 01,2014

    It happens far too often. We are in the line at a store, and we pay for goods in cash. The clerk suddenly looks pained, and we watch the ensuing struggle that comes from attempting to count back the change. It often takes a couple of tries, especially if the difference is not glowing on the register’s display.

    But apparently that simple example only points to a much bigger issue facing Vermonters: financial literacy.

    This week, it was announced that a financial literacy task force composed of 19 people across education, government, business and nonprofit sectors had been formed to develop recommendations to help our state’s policymakers “effect change in our schools, colleges and workplaces.”

    To them, it is a chronic problem that is adversely affecting people’s lives.

    Using data compiled by Champlain College’s Center for Financial Literacy, it seems clear that Vermonters are actually financially illiterate.

    “Many Vermonters are in a fiscal funk,” said John Pelletier, director of the center, in a news release issued this week. “Some are suffering continuing effects from the Great Recession, others never really learned the basics of personal financial planning in school or in life. And some are in for a rude awakening when it comes time to pay for college, buy a home or retire in this brave new world of self-funded retirement.”

    In some cases, it is even more severe. Many adults do not know how (or why) to reconcile a checkbook, or maintain bank accounts and loan information, or even work and live off a budget.

    Pelletier is absolutely correct when he stated, “We owe it to our fellow citizens to better prepare them for their financial lives in this increasingly complex world of savings and spending and financial survival.”

    So why the concern as of late?

    In 2013, the Center for Financial Literacy published a national financial literacy report card covering all 50 states’ high schools. Vermont scored a D because there is no personal finance requirement in high schools. Seven states attained an A grade, including Georgia, Missouri, Utah and Virginia.

    Recent data about Vermonters’ financial well-being are quite troubling.

    n Forty-one percent of U.S. adults gave themselves a grade of C, D or F on their personal finance knowledge.

    n Sixty-two percent of Vermonters do not have “rainy day funds” set aside for an emergency.

    n Forty-six percent of Vermonters have a subprime credit rating.

    n Sixty-three percent of Vermont college seniors graduated in 2012 with student loan debt that averaged $28,299, which was the 13th highest state student loan debt average in the nation.

    The Vermont Financial Literacy Task Force will start hammering out recommendations that should provide a road map for “teaching financial sophistication among secondary school students, college students and adults.”

    “We believe our work is critical to Vermont’s continued prosperity,” said Bob Allen, president and CEO of the Windham Foundation and chairman of the task force. “Vermonters need the skills and tools to take control of their financial lives. Ultimately, we expect to materially increase the financial knowledge of all our citizens and enable them to effect positive change in their personal and professional lives.”

    More importantly, we hope the task force can identify the reasons our personal finance skills have devolved so dramatically.

    Years ago, Vermont schools required basic competency testing for finances, among other skills, including counting back change. These were identified as fundamental skills. Just a generation ago, personal finance (and even basic accounting) played a vital role in school. Now, finances seem to equate to a game you play with your credit rating. The recommendations are key; the implementation will be just as crucial.

    The task force’s road map will be the path toward making better, responsible citizens. At a minimum, it should offer the skills for all of us to crunch numbers and not be crunched by them.

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