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Spending Smart: A new emphasis on financial literacy

By Gregory Karp, Chicago Tribune –

Success in life and money usually stems from making good decisions. But you’re unlikely to make good decisions without knowledge. And survey after survey shows Americans, young and old, just don’t have enough knowledge about basic money issues to make those good decisions.

Thus, the push for financial literacy.

It’s an effort to teach Americans more about earning, spending, saving, investing, insuring and dealing with credit and debt. Today, there are not only organizations and websites devoted to financial literacy but also online games, money tools and calculators, even a Marvel comic book.

“There is a lot of emphasis on improving financial capability in this country right now,” said Ted Beck, CEO of the National Endowment for Financial Education.

Americans need more money savvy as they are put in charge of their own retirement investing (instead of having traditional pensions) and as they navigate complicated forms of credit and endure bombardments of marketing trying to get them to buy more goods and services.

“Today more than ever, personal finance has become tricky,” said Laura Levine, president and CEO of youth financial literacy organization JumpStart Coalition.

But financial literacy is, at its root, about awareness, she said. “Most of us won’t become financial experts … but it’s still important for us to know the basics of how to make smart money decisions.”

To that end, we offer these resources and inspirations to improve money skills.

Consider these questions from a national test given to more than 1,000 full-time college students. Fewer than half answered them correctly. Overall, they scored 62.2 percent. How well can you do?


1. Inflation can cause difficulty in many ways. Which group would have the greatest problem during periods of high inflation that last several years?

a) Older, working couples saving for retirement.

b) Older people living on fixed retirement income.

c) Young couples with no children who both work.

d) Young working couples with children.


2. Sara and Joshua just had a baby. They received money as baby gifts and want to put it away for the baby’s education. Which of the following tends to have the highest growth over periods of time as long as 18 years?

a) A checking account.

b) Stocks.

c) A U.S. government savings bond.

d) A savings account.


3. If you have caused an accident, which type of automobile insurance would cover damage to your own car?

a) Comprehensive.

b) Liability.

c) Term.

d) Collision.


4. If you had a savings account, which would be correct concerning the interest that you would earn?

a) Earnings from savings account interest may not be taxed.

b) Income tax may be charged on the interest if your income is high enough.

c) Sales tax may be charged on the interest that you earn.

d) You cannot earn interest until you pass your 18th birthday.


ANSWERS: 1(b), 2(b), 3(d), 4(b)

SOURCE: JumpStart 2008 Survey of Personal Financial Literacy Among College Students



The number of online resources dedicated to financial education has exploded in recent years. Here is a sampling. Most are free, but a few have modest fees.

Government sites:

— U.S. government’s website dedicated to teaching Americans the basics about money.

—“Managing Your Money in Good Times and Bad.” Downloadable publication offering tips for spending less, saving more and borrowing smart, by the Federal Deposit Insurance Corp. (PDF file),

—H.I.P. Pocket Change. U.S. Mint.

Private sites, organizations:

—JumpStart Coalition Clearinghouse: Online library of financial education resources to teach young people.

—Smart About Money, by the National Endowment for Financial Education.

—Feed the Pig, by the American Institute of Certified Public Accountants.

— Site and mobile app that aggregates your financial accounts and allows you to set goals and budgets. Owned by Intuit, maker of Quicken software.

— Example of one of the popular blogs devoted to discussing money matters.

— Website aimed at educating youths about consumer issues, by the Take Charge America Institute at the University of Arizona.

—,, and are kids’ allowance-type sites to help children learn about earning, spending, saving and giving.

Games and stuff:

—Financial Football. NFL-themed game that tests money-management skills before each play. Correct answers move your team toward the end zone. By Visa and the NFL.

—The Stock Market Game. Gives students in grades four through 12 the chance to invest a hypothetical $100,000 in an online portfolio of stocks, bonds and funds. By the SIFMA Foundation.

—Avengers comic book. See Avengers comic book heroes, such as Spider-Man and Hulk, discuss money topics.

—Spendster. A site like YouTube where people can upload video stories confessing ways they have wasted money. By NEFE.

—PiggyMojo. Every time you don’t make a purchase, your partner gets a text message, challenging them to do the same.

—The Great Piggy Bank Adventure, by Disney and T. Rowe Price.

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