Many adults never quite master the concept of managing their finances but several New York City youngsters are now one step closer to becoming well versed in the language of money. They are all graduates of three week Financial Education Training program put on by the World of Money, a nonprofit organization that’s dedicated to empowering underserved youth by teaching them how to learn, earn, save, invest and donate.
Sabrina Lamb launched World of Money in 2005 after attending a financial seminar. As she listened to the lessons that day, she thought about how beneficial it would be if children could learn these concepts at an early age. That whisper of a thought turned out to be one of the greatest inspirations her life, and now, six years later, she has helped hundreds of young people become more financially savvy.
According to the Council for Economic Education, only 13 states require students to take a financial literacy-type course in high school. Programs like the World of Money are helping to fill that void and are providing young people with the tools they will need to secure a better financial future. And given that the nation’s economy is at a virtual standstill, teaching the next generation about budgeting, money management, investing, disciplined saving and responsible credit card usage could be one of the best defenses against economic uncertainty in the coming years.
WATCH ‘WORLD OF MONEY’ PARTICIPANTS GRADUATE FROM THE PROGRAM
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“When you give children the tools to be self-reliant, to be competitive in the world, to enter a world of prosperity, they’re so engaged, they’re so interested and they’re so excited about their futures,” said Lamb. “We must teach children that mediocrity is not acceptable and that you must always excel for excellence. Part of that excellence is to have a healthy relationship with money.”
A recent Pew Research study found that white families have twenty times more median wealth than their black counterparts, and that the last recession took the greatest toll on minority households. The abysmal unemployment rates in the African-American community and the general lack of understanding of how money works amongst young people only add to the problem, and are causing many to wonder about what type of financial legacy will be left for the nation’s youth of color.
The majority of the participants of World of Money’s Financial Education Institute are African-American, and in addition to educating minority youth on being financially responsible, the program’s facilitators also teach them about the importance of entrepreneurship, and having an adequate rainy day fund.
Nailah Garard is an alum of the institute. She and her brother Caleb have participated over the last few summers, and now they have a better understanding of how money works. These young moguls, who are both years away from their eighteenth birthdays, are also cashing in on their talents and applying the skills they’ve gained to launching their own businesses.
“My passion is to draw and that’s when I thought about my business to make different fashion design and make wearable art,” said Nailah. “And I was really impressed at how far you can go by just making a little business, how popular it can get and how much money you can make.”
The young entrepreneur, designer and owner of MsNaiArt.com draws her inspiration from nature, and her trendy tops have developed quite a following, especially online.
Her brother, who enjoys sports and chemistry, decided to embark on his own venture, and after coming up with a healthy blend of herbs and natural sweeteners, he concocted a low-calorie energy drink, Healthy Promise, for those suffering from heart disease, high blood pressure and diabetes. In addition to creating a website to market the product, he bottles his own beverages and labels each one meticulously with nutritional facts and figures.
“The World of Money inspired me to become an entrepreneur,” said Caleb. “I created this herbal drink because of the hypertension in my family and the next step is finding a bottling company that will buy my products.”
The organization not only offers a business institute for those interested in launching their own ventures, but it also provides students with opportunities to take part in activities like real estate tours and fields trips to the nation’s capitol. They’ve also been able to ring the opening bell on the NASDAQ floor, and they even had the chance to participate in an Amazing Race Challenge this last year. Most activities, including the Financial Business Institute, cost a nominal fee, and parents say that this is a small price to pay for what they receive in return.
“I think that this was an opportunity to open a door to him, to give him greater options as a young man of color, and it gives him greater opportunities for the future.” said Stephanie Mack, whose 11-year-old son Stefan, took part in the program and started his own trading card company. Instead of spending his allowance money on candy, he now saves his money for mutual funds instead. He also charges his friends interest on any money he lends them.
“I think that this financial literacy program should be one of the ABC’s of our educational system because many people don’t get a chance to talk about money,” said Jeanine Cook-Garard, Nailah and Caleb’s mom. “Courses like these are key and essential to navigating the world and learning how to grow in this economy.”
Many believe that financial literacy courses should be a mandatory requirement before young people enter adulthood. Yet a survey released by the National Endowment for Financial Education in 2010 found that nearly 64 percent of teachers consider themselves unqualified to teach finance education standards. Although 89 percent of these educators believed that these types of courses were necessary, only 37 percent of the teachers surveyed had taken a course related to these financial topics in college. And while 34 states have some form of personal finance instruction as part of their curriculum, the New York Times recently reported that “there is little consistency in the quality of the education.”
“We should develop a national standard for teacher training,” Ted Beck, chief executive of the endowment, told the New York Times in April of last year.
In February, a survey conducted by Washington Post, the Kaiser Family Foundation and Harvard University Poll found that that just 46 percent of blacks and 32 percent of Hispanics have IRAs, 401Ks or similar accounts, compared to the nearly 65 percent of white Americans who have them. Only one in four African-Americans own stocks, bonds or mutual funds compared to about half of white workers, and if the patterns hold, a large number of the nation’s minority retirees could be faced with tough choices during their twilight years.
One way to put an end to the cycle of disparity between minority and white households is for parents to teach their children early about the role of money in their lives. With many teenagers eventually having to make important financial decisions like taking out student loans or buying a car, ensuring that youth understand concepts like debt, saving, risk, reward and investing should start in the home, says author and psychotherapist Kate Levinson, who leads workshops for families to explore their emotional relationship to money.
“Isn’t it strange that we never are taught about money in school?” said Levinson. “And we usually aren’t taught about it in our home either. Money is so hard to talk about and there’s often a taboo about discussing it with our family members, so we don’t know anything about dealing with it. Talking to your kids about saving and spending and allowing them to learn about financial planning early in life will let them realize the difference between want and need and help them to develop a healthy relationship with money.”
“Give a child the tools early, and you can see a financially responsible adult that gives back to the world,” adds Lamb.
Helping youth become more fluent in finance and teaching them to have a healthy relationship with money will allow them to build a strong foundation of wealth that will yield the biggest return on investment in the years to come.