One morning in November, D’Whitney Harris, a freshman at Michele Clark Academic Preparatory High School, posed a question in front of an audience of educators, students, reporters and city officials: “How much would you have to save a day from age 18 to become a millionaire by 65?”
Jazanay Taylor, her classmate, didn’t miss a beat. “$7.50 per day, assuming 7 percent interest,” she said. “Were you surprised?”
From the back of the auditorium, Tracy Frizzell watched proudly as her students carried on the mock lesson on financial literacy—serving as capable ambassadors of the Economic Awareness Council, which Frizzell and four colleagues founded in 2003 to fill a void in financial awareness programming at Chicago Public Schools.
It is rare to hear teenagers talk about saving and investing money the way Harris, Taylor and their classmates can. For most teenagers in Chicago, financial matters like deposits, withdrawals or savings accounts are foreign concepts.
Through programs like Illinois Youth Saves, Get Real and On the Money magazine, the council teaches students the fundamentals of saving, budgeting, banking, credit, investing, business and entrepreneurship. Its philosophy is for teens to teach teens about how to be smart with their money through hands-on experience.
During its first year, the council worked with 50 students. Today, it far exceeds that number, serving 11,000 students in 2010.
Frizzell, the council’s executive director, says empowering students—especially youth from less-resourced families—with basic financial knowledge and real skills goes a long way in improving their prospects of completing college and creating a stable future.
“It’s absolutely essential to know whether you’re an auto mechanic or whether you’re a brain surgeon,” she says. “You need to know, once you get your paycheck, not to spend it all, to spend less than you make and to put some of it away.”
Frizzell has already seen a lasting impact on students’ behavior. One alumna of the organization’s internship program recently asked Frizzell to be a reference. For her, this was a small but important sign that the student’s experience had changed her outlook from, “‘I’m just a student, and I’m here to learn,’ to, ‘I’m a young professional and the whole world is open,’” she said.
The Chicago Reporter sat down with Frizzell to talk about her work.
What gave you the idea of financial skills training?
There definitely was a feeling that we spend so much time in schools learning some things that we end up using a lot later and some that we don’t. But this is a skill that everyone needs. These are very essential life skills that can’t be left just to parents. We should do everything we can to involve parents, to excite them and encourage them to help their kids learn, but we can’t count on it just happening at home. We know it’s just not working.
We saw a lot of our peers in college blow through financial aid, end up with more and more loans, and then not have enough money at the end of the semester. When they get their first job, they make poor choices like not selecting to be part of 401(k) and not saving for the future because they felt they just didn’t need to think about it. It’s a skill that really impacts a family in terms of their stability and health. If you are not able to make ends meet, you’ll have a whole host of problems. That was our concern.
The students we work with are mostly in the high school range. It’s such an important time period because ideally they will get their first employment opportunity, if they’re fortunate enough. Around that time, they will get their first paycheck. At our internship program, we ask teens, ‘What are you going to do when you get your first paycheck?’ The first response is usually that they’re too excited to even think about it, and they’re going to run out and spend it all. When asked, ‘How are you going to get the money out of the check? You know, it’s just a piece of paper.’ The immediate response for most of them is, ‘I have to go to check cashing.’ They haven’t thought through that there are fees with check cashing and that they can’t build any savings. They’re also not building a relationship with a financial institution. For really, truly helping these students get on the path toward building wealth and financial stability, they need to be connected with more mainstream financial institutions.
What makes the Economic Awareness Council stand out?
The cornerstones of our programming are a focus on peer-based activities that emphasizes behavioral change and really evaluating the visible impact of our programs. There has been a lot of growth in this area since we first started, and quite honestly, everyone plays a vital part in sharing this information. But the research shows us that students, even if they get some financial literacy in school, still aren’t leaving with the proper skill set. This is one of the reasons that especially in the past few years we’ve really focused on, ‘How can we change behavior? How can we make sure we have a lasting impact on students in terms of them actually starting to save and actually starting to open accounts?’ I really believe that will help us to see more long-lasting changes.
Why is financial literacy important now?
Financial literacy is absolutely critical right now because everyone is pinched. Everyone is feeling like even if you have a job right now, you’re never sure what tomorrow will bring. And it is absolutely critical that people begin to build emergency savings whether you’re 15, whether you’re 40 or whether you’re 70. You should have some money in the bank that you can turn to. We know in America that about three in four people do not have enough emergency savings. It’s especially important among youth because the No. 1 reason students drop out of college is financial pressure.
Often we found that college kids get their funds in a lump sum. They are tempted to spend that money immediately, because it’s the most money they’ve ever seen. By the end of the year or semester, they’re running low. Often students aren’t going out and buying Prada this or Gucci that or whatever. They’re doing OK managing their money, and then something bad just happens. Their car breaks down or they get sick and miss their part-time. So they end up turning to credit cards or not being able to pay their bills. If a student can go into college with the money to fall back on even if it’s just $300 or $400, it can make a huge difference.
Why do you focus on less-resourced students and families?
Really there is a need for this information at every level. We do some work in schools that don’t have a high percentage of low-income students and find there is a need to know how to manage your money. Sometimes those kids have access to blow through more money, but the disparity in knowledge is quite significant. It’s a lot of bang for your buck, shall we say. You can make a big impact with the students we work with right away if they can master a few of these basic skills.
What have been some successful strategies?
Definitely to make it very hands-on. Instead of just putting up a PowerPoint of what a bank account is or what it is to make a deposit or withdrawal, have the students actually do it. A lot of the difficulty is that they’re not familiar. We really want the students to always leave each of our classes feeling like, ‘I did X skill. So when I am an adult or when I first get the opportunity as a teen, this will be easy for me because I’ve already done it.’
Whenever you can involve peer role models is fantastic. We know from our surveys and from the Consumer Federation of America’s surveys that people like to learn about money and learn best from their peers. It’s great if an expert comes in, but you don’t necessarily feel like that’s for you. ‘They’re through college; they already have money. It’s not for me. I don’t have to pay attention.’ But when it’s your buddy who lives down the street and hasn’t had a regular job yet and is another 14-year-old, and he’s done it—he’s saved up $10 to make his opening deposit. Then you start to pay attention.
Focus on behavior change and actually doing. One of the problems is that students are receiving more classroom-based instruction and testing related to financial literacy, but they’re not having an opportunity to actually apply it. My co-worker from Illinois Saves has an analogy he likes to use. If you were learning about baseball and it was all in the classroom, if you just learned what the rules are and how you score, and you just wrote about it and filled out forms, it wouldn’t be very interesting. You would have no desire to play baseball. That’s kind of how we’ve been approaching financial literacy.