The United States Congress designates April as Financial Literacy Month. Hence, the biennial survey of high school financial literacy by the Jump$tart Coalition® for Personal Financial Literacy.

The 05-06 survey tested nearly 6,000 high school seniors in 37 states to build a statistical model of what American students know about personal finance as they prepare to exit official childhood.

HIghest average scores for the Jump$tart studies were reported in 1998 (57.3 percent). The lowest scores were reported in 2002 (50.2 percent). Students in the 2006 report scored an average of 52.4 percent. None of which sounds like a passing grade.

Lewis Mandell, professor of finance and managerial economics at State University of New York Buffalo School of Management, conducted the survey for Jump$tart: “This indicates that, despite the attention now paid to the lack of financial literacy, the problem is not about to resolve itself any time soon.”

This is not good news for employers, lenders, anyone, really. You probably already thought of that.

Worth noting from the 2006 results:

• Only 14.2 percent think stocks are likely to have higher average returns than savings bonds, savings accounts and checking accounts over the next 18 months
• Just 22.7 percent know that interest on savings accounts may be taxable
• Only 40.3 percent understand they could lose their health insurance if their parents become unemployed
• African Americans scored an average of 44.7 percent
• Hispanics students scored an average of 46.8 percent
• White students scored an average of 55 percent

Reality Check

A series of three questions tested students’ grasp of financial realities. The first asked students to identify the greatest cause of financial problems so serious that families can’t pay their bills. Those who identified bad luck — such as unexpected illness or job loss — as the greatest cause of family cash flow crises had average financial literacy scores of 49 percent. Those who said such conditions are caused by buying too much on credit had average scores of 55 percent.

A second question asked how bad students thought it was for families who lack enough money to pay their bills. Those who said it was “not so bad, a lot of families go through this,” had average financial literacy scores of 43.2 percent.

A third question asked students what they think happens when people retire without sufficient savings or pension income. Those who believe people can live pretty well on Social Security had average scores of 39.9 percent. Those who said people in that situation “find it tough to live on Social Security” averaged 56 percent.

Just 16.7 percent of American students currently complete school classes in money management. Not that it makes much difference. The Jump$tart study found that those students scored slightly lower in financial literacy than the average for all students.

Laura Levine, executive director for Jump$tart said:

Clearly the survey demonstrates the large gap between what students know and learn from life-experiences and the need on the part of adults to find the right combination that will make financial literacy meaningful to young adults leaving the safety of high school.

In May, 2005 Al Lunsford commented about a New York Times column where Thomas Friedman paraphrased remarks from Bill Gates to a conference of US Governors:

If we don’t fix American Education, I will not be able to hire your kids.

From all appearances, fixing American education is shaping up to be a long term project. It will be worth it if we find the wisdom and skill to accomplish the job. In the near term, there’s something people like us can do that has a direct impact on financial literacy.

The folks at Junior Achievement place volunteer businesspeople in classrooms where they lead schoolchildren through JA’s excellent economic education activities. Junior Acheivement isn’t everywhere yet but they have offices in 495 towns and cities around the world. Programs range from a month to 12 weeks and JA welcomes people at every level in all sorts of businesses. And who better than people in business to help children and adolescents understand why economic literacy matters?

Does your company want to give back to your community? Meet the people at Junior Achievement and find out how to get involved, then give your employees the hour a week it takes to lead students through a JA economic learning activity.

When companies consider sponsoring the InsideWork website, we tell them about an event we’re developing called MyIPO, saying,

We dreamed up MyIPO because we’re convinced schools (from grade school through business school) don’t prepare people for work in the world as we know it. Business leaders regularly point out how little most young workers know about creating value for customers and companies. And don’t even get us started on the snide remarks about the two years it takes a newly minted MBA to unlearn enough to make any money for his or her employer.

We’re developing MyIPO because InsideWork can’t do much to take economic education to grade schools. But you can. Today’s schoolkids are tomorrow’s workers (and customers for that matter). Align yourself with Junior Acheivement or someone like them. The earlier we all take responsibility for legacy planning, the better off we’ll all be.