Abstract:

U.S. Economy Still in Crisis:
In 2012 the United States remains a nation with economic problems. Economists point to the collapse of the housing market in 2006 as the start of America’s problems. When housing prices dropped below the amount borrowed, borrowers opted for bankruptcy, and banks accumulated large losses. When the housing market collapsed, demand for goods and services dropped so businesses began to lay off workers, unemployment rates increased and the U.S. economy moved into a period of recession. Added pressure came from: 1) a growing dependency ratio as the large “Baby Boom” population retired and 2) increasing debt as the U.S. imported more than it exported.

Overspending and Debt in America:
The financial crisis in the U.S. has affected members of the population in different ways. Low income consumers are now paying for goods and services they need on a daily basis with their credit cards. Also American households in general have one of the lowest savings rates (4.3%) in the world, compared to their consumption rates (71%)[1]. College students are incurring high levels of debt. They use student loans to pay not only for tuition, books and housing, but also for daily expenses. They also have little money left at the end of each month to save. All other factors held constant, researchers have found that more educated individuals tend to overspend more than less educated persons probably because the former has more access to credit.

Role of Financial Education in the Curriculum:
In order to prepare the next generation of Americans to be able to increase their savings so they can achieve a level of economic self-sufficiency, it is important for schools to take a lead role in improving the financial literacy of children by including saving and spending concepts and skills into their curriculum. One innovative program that is accomplishing this goal is the Children’s Savings Project in Hawaii. This project, started in 2008, involves the removal of barriers to saving and provides incentives to promote savings behavior. The project helped elementary school children set up a savings account and enables them to make monthly deposits at their school. Bank representatives come to the school to collect deposits, so saving is made more convenient and the children gain peer support from their classmates who are also saving. This partnering arrangement with financial institutions has increased parental involvement in what their children are learning in school. As account balances grow, both the parents and the children are experiencing firsthand the benefits of saving regularly and early in life.

Low savings rates affect not only the adults but also children. When there is less money saved, parents, forgot saving for their children's future, which can affect investment in their human capital. The curriculum that is being developed under the Children’s Savings Project is shaping goals and values that will help the children to develop life skills that can lead them to improved economic self-sufficiency in adulthood.

References:
[1] Valentina Pasquali and Tina Aridas. (2012). Household Savings Rates by country. Global Finance. http://www.gfmag.com/tools/global-database/economic-data/12065-household-saving-rates.html#axzz2ExMzTFVS

Keywords:

Best practices, childrens savings.