Financial classes offer buoy in sea of sinking boats

by David Flaum, The Commercial Appeal

Eight years ago Emma Bowling filed a bankruptcy petition. Last week she finished the last of three financial education classes at the Memphis Literacy Council as she got ready to start a job as a day care bus driver. "I think what I learn will help me avoid the financial problems I've had in the past," Bowling said after listening with about 20 others to ideas for taking care of her income tax return.

That's the core argument for financial literacy: knowledge may help avert disaster and promote the ability to build wealth. Beth Dixon, president of the RISE Foundation and a leader of the Memphis Credit & Bankruptcy Collaborative, said, "We've seen the effect of people operating on their own in terms of the bankruptcy rate, debt-to-income ratio and foreclosure rate. People are not only losing ground, but also they're losing their assets."

The situation has even caught the attention of the U.S. Senate, which last year designated April 2003 as Financial Literacy for Youth Month to highlight the need for increased financial and economic literacy and education. "Since then there has been wider recognition that we need to broaden the spotlight to include problems resulting from pervasive financial illiteracy among adults of all ages," Sen. Daniel Akaka, D-Hawaii, said March 9 in asking his colleagues for a resolution to make this April Financial Literacy Month.

U.S. Bankruptcy Court records reflect the widespread lack of financial education: The 28,202 filings in the West Tennessee district last year set another record as bankruptcy petitions nationwide ballooned to 1.6 million.

"People are looking for an immediate solution to their problem rather thanthe long-term solution," said Judge William Houston Brown, a judge in the court in Memphis. "I'm convinced that better financial literacy education would improve that."

Schools are the place to start, Brown said.

"There's no other way for people to get it," said Lewis Mandell, professor of finance and managerial economics at University of Buffalo. He conducts a survey every two years of personal finance knowledge of high school seniors for the Jump$tart Coalition for Personal Financial Literacy. "The only way to get information to people is if you have a large stick," he said, like a class grade for a student. "If it's voluntary, the first chance that there is a conflict, people don't do it. That's because they don't have any skin in the game. To master any subject is a lot of work. It's not fun. It's dreary and repetitious. That's why kids have to go to school."

The younger you start, the better, said Ron Roudebush, regional manager of Consumer Credit Counseling Service in Memphis. He said his wife, an elementary school teacher, uses M&Ms to illustrate saving - eat one now or wait and get five at the end of the day. main challenge facing those who want to push financial literacy in the classroom is finding the money, materials, time and qualified teachers - especially with school officials riveted on federal No Child Left Behind requirements.

The Tennessee Jump$tart Coalition for years tried to persuade state legislators to require financial education in public schools. "We've tried to take some time off from the legislative path," said Christy Minton, president of the group and northwest region community reinvestment officer for BancorpSouth. Now the group is encouraging the Tennessee Department of Education to buy books for currently offered courses that include financial education, she said. Shelby County high schools rolled out a National Endowment for Financial Education (NEFE) program for high school economics and personal finance classes, but Memphis city schools have no similar setup, save for use of the NEFE program in the junior Army ROTC program at 23 high schools. People from banks and credit unions work at individual schools to help teachers.

Julie Heath, chairman of the University of Memphis economics department and the collaborative point person on education in the schools, has met with City Schools Supt. Carol Johnson about adding a financial literacy element to the curriculum. Heath said she would present her ideas to the school board on April 23. "Everybody's on board in terms of the need," Heath said. "The question is how we go from everybody nodding their heads in agreement to implementation…We do really need to institutionalize this so everybody's on the same page."

Schools are only one of three places the RISE Foundation's Dixon believes financial literacy is best promoted. Workplaces and churches are the others. "People aren't going to go out and look for it themselves because it's like identifying yourself with an illness," she said. So programs have to go to the people.

The RISE Foundation, whose main program encourages saving and financial education among public housing residents, has gotten a grant to start a similar program on budgeting, money management and credit repair at businesses, she said. "We want to put this on the front burner of the business community," said Walter Dawson, senior communications specialist at First Tennessee Bank and a debt collaborative member. "The financial health of employees is not something businesses have dealt with traditionally," he said. "A hundred years ago companies looked at physical health that way," Dawson said. "But making personal financial education available to employees may improve morale, productivity and eventually profits," he said.

The debt collaborative is working on a program with churches, too. The first session - for people who are considering filing bankruptcy - will be April 29 at 6 p.m. at First Baptist Church Broad Street, 2835 Broad.

And there are the community groups, such as the Literacy Council, that are starting to develop financial education offshoots. "We wanted to formally introduce information that meets real-life needs," said Gay Johnston, executive director. Thus, the council offers sessions on budgeting, simple investing and retirement planning and taxes.

For people like Emma Bowling and Ora Lee Franklin, it's a matter of being independent. Franklin credited the late Dr. Lee Brown, a Memphis city school board member and her pastor at Springdale Baptist Church, for inspiring her to join the literacy program. That carried over to the financial literacy classes. "He always taught us to learn to do things yourself," Franklin said.