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December 30, 2009 - (by Dana Parsons, Los Angeles Times)

Kelsey Steinke thought of herself as a fairly bright college student -- except when it came to managing personal finances.  "I knew very little," she said. "Not much at all."  Compared to some of her peers, however, she was a downright prodigy. "I mean, there are some girls who don't know how to do laundry," she said. "If they can't do their laundry, how can they handle their finances?" 

That less-than-kind reality, coupled with a troubled economy that has frightened both novices and experts, has spurred renewed interest in teaching financial literacy to high school and college-age and younger students.

It persuaded Steinke, a sophomore at Chapman University in Orange, to take a class from Union Bank Vice President Pierre Habis, who taught the semester-long class, taking a dollar in pay. It also led the city of Irvine to offer a summer program for high school students on the elements of finance. And more states are including some personal finance study as a high school graduation requirement.

"I've been a financial literacy advocate for some 16 years, even before financial literacy was Google-able," said Kathy Griffin, founder of MoneyU in Rockville, Md., the online game-based program that Irvine used for its summer offering. "I've watched the problem go from bad to worse to even worse in that time."

Although some high schools and colleges have offered courses in personal finance-related matters over the years, "the financial landscape has become a lot more complicated now," Griffin said. "It's a difficult subject to teach."

She's not suggesting that high school or college students need to understand collateralized debt obligations or reverse mortgages to function in society.

But how about the ins and outs of credit card debt? Of taking out a loan? Of opening a savings account?

Habis began talking with university officials a year ago about teaching.

Even at the bank, he says, he saw signs that young employees weren't putting two and two together.

As an example, he said people in their 20s left for other jobs for minimal pay increases largely because they thought the move would help pay off their debts. The better long-term play, he said, would have been to stay at the bank.

Still, Habis says he was surprised by the gap between what he thought his students would know about finance and what they actually knew.

Both he and the students "had self-discovery about how much they didn't know," he said, and slowly worked "through that gap together."

Steinke says the class helped.

"I just wanted to learn how everything works," she said, noting that a personal loan contract sounded as if it were written in a foreign language. "When I was reading it, I had no idea what they were talking about. I was just so confused. I just wanted straight answers and I couldn't find any. I knew I had to figure it out myself, so I signed up for the class."

Louis Polak, a sophomore who took Habis' class, thinks he has a leg up on some of his peers. "I was pretty surprised," he said, "to find that my roommate just recently started banking and really had no sense of how to bank, how to write a check, how to deposit money -- just simple things I thought everyone knew."

It's not that college students don't care. "They just don't really know they're hurting themselves by not knowing about this," Polak says. "They're just kind of ignorant on the subject. No one's ever told them what's going to happen to them in the future to give them an idea of how important it is to start right away."

Polak's parents opened a bank account for him when he was young and emphasized the importance of saving money. He thinks high school would be a good time to expose students to the rudiments of personal finance.

Amen, says Griffin, noting that only seven states require some instruction in financial education as a graduation requirement -- and California isn't one of them.

"Young people have access to credit and loans now more than ever," she said, "and it's no good to graduate . . . deep in debt. We need a strong, taxpaying middle class; and today's young adult is the next middle class, and we don't want all those folks on the dole and in student loan default."

The sometimes frightening economic news of the last two years should have sent everyone a wake-up call, Griffin says. "The worst case happened, and it didn't affect just young people but their parents as well. Financial literacy across the board is deplorable," she said, but added "it doesn't take financial mastery to be able to be financially self-sufficient."

At midsemester, Habis was frustrated by some students' pace and wished he didn't have to worry about grades. He worried that he wasn't getting through to them. What's important, he says, was that the students acquire the financial knowledge that would help both them and society.

Learning how to control one's finances, Habis says, contributes to a person's confidence and self-esteem. "When you're more confident, you're more successful. That's just how it is," he said. "And if you feel confident in how you structure your finances, you get motivated by it."

Polak gets it.

"Even though now I'm mostly supported by my parents, eventually I'm going to have to leave that and do this stuff on my own," he said, "which is why I want to gain confidence in this area before it happens."