National Journal: JA Finance Parks Improving Financial Literacy

Two heavy doors at the front of the theat­er and a lowered pro­jec­tion screen block the kids from the mys­tery on the oth­er side. It was what staff at the Ju­ni­or Achieve­ment Fin­ance Park call the “big re­veal,” which they as­sured would awe the 40 or so Prince George’s County eighth graders who sat in their theat­er seats with un­char­ac­ter­ist­ic si­lence.

“Every­one is go­ing to get a new iden­tity,” a teach­er ex­plains from a lectern be­side the screen. “You might have kids, you might have a spouse. You’re go­ing to have a job to pay your bills.”

The stu­dents were on a field trip from Ket­ter­ing Middle School in Up­per Marl­boro, Mary­land, to vis­it the new fin­ance park run by Ju­ni­or Achieve­ment, an or­gan­iz­a­tion that, in part, helps kids un­der­stand money man­age­ment. The stu­dents sat in the theat­er seats in blue uni­forms. Among them was Prince Boyd, 14, a bright but shy kid. In real life, Prince dreams of be­com­ing a mar­ine bio­lo­gist, but for today’s pur­poses, all he wants is a sports car.

Since the re­ces­sion, our coun­try has be­gun to ac­know­ledge that it has a fin­an­cial-il­lit­er­acy crisis. A 2009 Na­tion­al Fin­an­cial Cap­ab­il­ity sur­vey found that Amer­ica’s un­der­stand­ing of money man­age­ment, fin­an­cial plan­ning habits, and fin­an­cial de­cision-mak­ing was “troub­ling.” And though it’s an ac­know­ledged prob­lem, only 19 states re­quire schools to of­fer a per­son­al fin­an­cial course.

In a 2015 study by Champlain Col­lege that rated high school stu­dents in all 50 states on their fin­an­cial un­der­stand­ing, more than half came in at a “C” or be­low, and even some states that earned a “B” re­quired only 15 hours or less of in­struc­tion. Only five states (Utah, Geor­gia, Ten­ness­ee, Mis­souri, and Vir­gin­ia) scored an “A;” all of those states re­quire per­son­al fin­ance courses.

It is a sub­ject that par­ents of­ten don’t dis­cuss with their kids. In fact, a sur­vey by the fin­an­cial-plan­ning ser­vice Charles Schwab found that par­ents talk about money man­age­ment to their chil­dren as in­fre­quently as they talk about dat­ing and sex.

This is why Ed Gren­i­er, the CEO of Ju­ni­or Achieve­ment of Great­er Wash­ing­ton, says it’s his goal “to reach every eighth grader” in the area. It’s a cru­cial time, he says, be­cause that’s “when spend­ing habits start.”

There are 18 fin­ance parks in the coun­try, and this loc­a­tion in Prince George’s County, which opened in Oc­to­ber, is the second in the great­er Wash­ing­ton, D.C. area. After in-class study ses­sions on cred­it, in­terest rates, and budget­ing, some 9,000 eighth graders in the county are ex­pec­ted to vis­it this new, 13,500-square-foot build­ing each year.

On the out­side, the fin­ance park is a mod­ern build­ing that looks like a gi­ant ship­ping con­tain­er. On the in­side, it’s a theme park where each stu­dent re­ceives an elec­tron­ic tab­let, and on that tab­let is a ran­domly se­lec­ted pro­file, like an avatar in a di­git­al game of life. Prince com­pleted a 92-page work­book that covered sub­jects like how to file a 1040-EZ tax form, and how to pre­pare for life’s emer­gen­cies—“Friend is hurt in your home. You need: homeown­ers in­sur­ance.” For Prince, the fin­ance park prom­ised to of­fer some fun, out-of-class learn­ing.  

Anxious to learn his pre­tend fu­ture, Prince and the oth­er stu­dents watch as the pro­jec­tion screen rises and the doors swing open. There is a quiet pause among the stu­dents. Then laughter.

In the oth­er room is a bank of mock de­part­ment stores. There’s a home re­alty of­fice, a cred­it uni­on, a car in­sur­ance shop, even a res­taur­ant (though it serves no food).

A staffer hands Prince his tab­let, covered in a pro­tect­ive rub­ber case, and that’s when he learns that he’s a land­scape de­sign­er with $31,000 in school debt. He makes $46,500, and is a single par­ent with a 2-year-old son. He clicks on a menu and reads the ad­ded costs as­so­ci­ated with child-rear­ing. With dead­pan voice and sul­len face, he says, “In real life, I’ve de­cided that I don’t want a kid.”

The stu­dents spend the next sev­er­al hours work­ing through a soft­ware pro­gram that asks them to di­vide their monthly salary in­to all the nor­mal costs as­so­ci­ated with adult life.

One of the best pos­sible pro­files is a 34-year-old fin­an­cial man­ager who brings in $109,000 a year, is single, and has no chil­dren. On the op­pos­ite spec­trum is a mar­ried re­cep­tion­ist with one child who earns $29,000. The stu­dents use these pro­files to make budget­ary de­cisions. What type of car can they af­ford? Should they rent an apart­ment near the city or buy a man­sion in the sub­urbs? Can they fur­nish it with plush fur­niture and flat-screen TVs? At the end of the day, the stu­dents will need to have planned a sus­tain­able budget.

“What hap­pens is what you would ex­pect,” Gren­i­er says. “They go to buy a house and they buy one they can’t af­ford. They go to the gro­cery store and buy all the ex­pens­ive stuff.”

In each “store,” the stu­dents hold their tab­lets to a com­puter to learn what they’ll need to budget. As he leaves the elec­tri­city and util­it­ies sec­tion, Chid­era Nnawuba, 14, catches on quickly. He is a bus driver who makes $38,000 a year and he’s bought the least ex­pens­ive apart­ment, has spent as little as pos­sible on life’s frivolit­ies, like NFL tick­ets, and won­ders aloud if he could sur­vive without a car. “I don’t really like be­ing a bus driver,” he says.

This type of train­ing has proven to help stu­dents. A 2015 study by the Fin­an­cial In­dustry Reg­u­lat­ory Au­thor­ity looked at Idaho, Texas, and Geor­gia—states with low, mod­er­ate, and high in­tens­ity fin­ance pro­grams, but all of which re­quire one—and found that stu­dents who took the course saw im­prove­ments in their cred­it scores and were less likely to be­come de­lin­quent on fu­ture cred­it pay­ments. In its own pre-/post-tests, Ju­ni­or Achieve­ment has found pos­it­ive in­creases in fin­an­cial lit­er­acy, gains which it qual­i­fies as “mod­er­ate to large.”

“A light­bulb comes on when they un­der­stand that these are the choices their par­ents make every day,” says Leanne Posko, seni­or man­ager of com­munity af­fairs for Cap­it­al One, which in­ves­ted $3 mil­lion in the new park. “It’s about mak­ing them un­cov­er these de­cisions.”

Not all kids have their light­bulb mo­ment. At a desk in­side the sta­tion where stu­dents bought their pre­tend homes, the kid sit­ting across from Prince had budgeted all his ex­tra money for trips to the movies and sport­ing events. Now he can’t af­ford fur­niture or a bed.

A teach­er over­hears this and says he needs to re­con­fig­ure his budget. “You have a fam­ily,” she says.

“Why can’t they sleep on the floor?” he asks.

Prince scrolls through his list of ex­penses. He’d bought a three-bed­room house in the sub­urbs in­stead of a mod­ern down­town apart­ment (like he wanted). He sac­ri­ficed the name-brand cloth­ing op­tion so he could buy his son a zoo pass. “I want him to be in­ter­ested in an­im­als,” he says. “I re­mem­ber when I was a kid, my dad took me to the zoo.”  

As for the sports car, Prince com­prom­ised. He bought a 2006 In­fin­iti.