MR. MATT MCCLESKEYFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your community with the world. I'm Matt McCleskey sitting in today for Kojo. In this hour, compound interest, tax liability, budget planning. We live with these concepts every day, but how well do we really understand them? Some financial principles that have gotten many adults into trouble over the last few years are moving down a generation and into the classroom, part of a new push to teach kids the financial skills they'll need in an increasingly complex economy.

MR. MATT MCCLESKEYIn Virginia, this year's ninth graders are the first class required to take a new separate financial literacy course to graduate from high school. In Maryland, petitions are circulating to ask voters to approve a similar required course in finance. It's hard to find anyone who thinks we shouldn't teach financial literacy in the schools, but there is a lively debate about when to do it and how to do it. Joining me this hour for this conversation, Annamaria Lusardi, professor of accountancy and economics at George Washington University School of Business.

MR. MATT MCCLESKEYShe's also the editor of "Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs." Thanks for joining us.

PROF. ANNAMARIA LUSARDIHappy to be here.

MCCLESKEYAlso in studio, Ed Grenier, president and CEO of Junior Achievement of Greater Washington. Thank you for being here.

MR. ED GRENIERThanks for having me.

MCCLESKEYAnd joining us by the telephone is Tina Lambert, founding chair and board member of Virginia JumpStart Coalition for Personal Financial Literacy, vice president of Virginia Society of Certified Public Accountants as well. She joins us from Richmond. Good morning to you.

MS. TINA LAMBERTGood morning.

MCCLESKEYAnd, Tina, I'd like to start with you. For several years now, public schools in Virginia have taught financial skills in middle school and high school. But, as we mentioned, this year's ninth grade class is the first that is required to take a standalone financial literacy course to graduate. You were involved in pushing for this new class. What convinced you it was needed?

LAMBERTWell, having started our Virginia JumpStart Coalition back in 2005, we had begun to do a lot of research about some other states who had the standalone course in place and some of the results that they had seen in terms of the way that it raised the knowledge that students were able to obtain.

LAMBERTSo, having kind of looked through that process and looking at the way it was currently taught in Virginia schools -- much more of that piecemeal approach -- we determined that a one-credit course or a standalone course was really the most effective way to ensure our young people will -- were able to graduate successfully and manage their money wisely.

MCCLESKEYNow, each school...

LAMBERTIt really was based on a lot of research and looking at what had been done in some other states.

MCCLESKEYEach school district in Virginia can decide how to set up its own financial literacy course. What are some of the different ways that schools are planning to teach the class?

LAMBERTThere's definitely a lot of flexibility built in with the requirement in Virginia. Some schools already had a personal financial course in place that was an elective course, so they're easily able to transition that into a required course. Some other schools already had economics courses in place. In fact, many also have an AP Economics course in place. And there's ways to modify that course to have it meet the requirement.

LAMBERTAnd then there's also an online component that Virginia developed through Virtual Virginia that makes an online module open to all schools who find that to fit within their course schedule so it would not take up classroom time during the school year.

MCCLESKEYNow, Annamaria Lusardi of George Washington University School of Business, you've written extensively on financial literacy and taught students at the college level. Why is it important for financial education to begin in high school or even earlier?

LUSARDIWell, I would say certainly high school, but I would say even earlier than that if possible. You know, as in every other topic, you know, we start little, and we start basic. And we build upon it. So I hope that, you know, we eventually -- we really go to a series of courses where, you know, we start as early as possible, and student, as they do for history or math or literature, start learning this basic concept, and then we have something to build upon it. You know, just one course might not be enough for people to become well-versed in this topic.

MCCLESKEYWhat are some of the things that can be taught in terms of financial literacy? At some points, it's been thought of as a how-to type of class, how to balance your checkbook, something along those lines, and not perhaps seen as a discipline unto itself.

LUSARDII think this is indeed a very big problem, and I hope that this -- when we look at financial literacy, we will come to realize that this is a very rigorous topic. And it is based in economics, finance. And in the social sciences, it is a very rigorous topic and has to be taught like that. In fact, I think we should definitely move away from how-to-do course. It can't be only a how-to-do course, how to balance your checkbook.

LUSARDIAnd some of these fundamentals, I think, are essential for -- to equip people to understand the working of financial markets and to understand how to make financial decision. One of the line I always have when I discuss this -- you know, once people know interest compounding and the law of interest compounding, you know, they'll be able to understand why it's important to start to save early and why it's important to be careful at borrowing at very high interest rate.

LUSARDIAnd, you know, interest compounding is not different in Virginia or in Vermont, and it has not changed because we have a financial crisis. These are the fundamental concept that the student really need to have in order to be able to make good financial decisions.

MCCLESKEYI would imagine, particularly with young people having credit cards, perhaps earlier than they have in the past, that becomes quite important.

LUSARDIAbsolutely. And concept, which are the basis of financial decision, from the interest compounding to risk diversification to the fact of inflations are really some of the basic concept that should sit in those courses. And, again, as for math, science and history, you know, we need to teach them little by little, so student really have a chance to understand and, you know, to go from the basic concept to the more sophisticated concepts.

MCCLESKEYAs we mentioned a moment ago, of course, ninth graders in Virginia this year, required to take a financial literacy course before graduating. Ed Grenier, your organization, Junior Achievement of Greater Washington, has been involved in teaching financial literacy in the schools for several decades in classrooms from kindergarten up through high school. Your model is a bit different, though, with volunteers. Explain a little bit about how you work.

GRENIERYeah, we were founded actually in 1919, so we've been doing this for a long time. And since our founding, we've believed that, because of this subject matter, financial literacy, economics, work readiness, that it's better to have it taught in a realistic hands-on experiential way, so our model is pretty straightforward. We have a proven curriculum that aligns with state standards, but it's taught by outside adult role models that we go into the business community, into the parental community, into the community at large and train them. And they go in, kind of on scale, around the region to teach our programs.

GRENIERIt's very effective 'cause the experience and the real-life stories that they bring and the way they can illuminate and expand on the curriculum, I think, helps the students get those ah ha moments in a unique way.

MCCLESKEYWell, that gets to the question of who should be teaching financial literacy to students and whether it's best to have volunteers coming in from the community with their experience or teachers particularly geared toward teaching this subject matter. Tina Lambert, there in Virginia, who's going to be teaching these required classes that now ninth graders or -- and then high school students going forward will have to take before they graduate?

LAMBERTThere's a variety of teachers that will be involved in implementing the course. The way it was set up in Virginia, they allow teachers in a variety of different departments to have endorsements to teach, including history and social science, mathematics and the (unintelligible) education. And a lot of the teachers rely greatly on great programs, like Junior Achievement. There's Virginia Council on Economic Education, as well as other volunteers who they'll use to come into the classroom and supplement the education that they're receiving from their teacher.

LAMBERTSo it's really a great collaborative approach in Virginia between the educational system, as well as the greater business community.

MCCLESKEYWan to ask our listeners: What do you wish you'd learned in school about personal finance that would have helped you avoid a costly mistake perhaps? And how well do your children understand the basic financial principles you think they'll need to manage their money and to make wise decisions? Give us a call to take part in the program. The number, 800-433-8850. 800-433-8850. You can also send us an email at kojo@wamu.org. You can get in touch via our Facebook page as well or send a tweet to @kojoshow.

MCCLESKEYAnd, Ed Grenier, speaking of Virginia, your organization has been involved around the region, including in Fairfax County, with a facility called Finance Park, putting all the county's eighth graders through a hands-on budget planning lesson. How does Finance Park work?

GRENIERYeah. Just to echo what Tina just said, our model is structured in a way that the students take about 20 hours -- 21 lessons over 20 hours of financial literacy education in the classroom taught by the teacher. So teacher training is key. We've had to create unique ways to have that taught and reinforced throughout the year. But the students learn basically three things. They'll learn how financial institutions work, what credit is, what debit is, how to balance a checkbook, how to chart stocks.

GRENIERThey'll learn about all the different types of taxes, where the money comes from, where does it go, what it's used for. And then they'll spend a good chunk of the time in the classroom learning how to create a personal budget, all the lines that most of us have -- transportation, housing. But then the unique part about this program -- and I like to say it becomes (word?) in hands-on experiential -- when the students finish that curriculum, they -- about 125, 150 a day go to Junior Achievement Finance Park, which if you can visualize it, it's a little mini-city.

GRENIERIt's got 18 storefronts in it. It looks like a mall. About 10,000 square feet is the actual mini-city. And the students are charged with a couple things throughout the day. First, they're told they're going to be treated as adults, and they're going to be charged with creating a balanced budget. What they don't know is that they're going to do that through a life situation that we give them. So, you know, Johnny might be 42, married, three children and have this salary. Mary would have a different scenario. So they go through the day making decisions.

GRENIERThey'll go into the Verizon storefront and see if they want the triple player or the double play. They'll go into the recreation storefront and decide if they want to go to the movies or what they want to do. And you can just look at -- and we basically go through that scenario and all 18 budget lines. And I have to tell you that the students walk in, thinking they know it. They don't realize how much they have to learn. And within three to four hours, these ah ha moments, these -- the -- what comes out of their mouths is funny to hear, you know, eighth, ninth, 10th graders talking like adults. So they get it.

GRENIERThey get it, and they learn it because they make their mistakes there. We throw some curveballs in throughout the day. They'll have an unlucky chance when they go to a computer. Their car might break down. They might have to go to the medical emergency for co-pay on their insurance. But they learn by doing. They learn by making mistakes. They learn by our simulation, taking them through a day of implementing what they learned back in the classroom. So it's a great accompaniment to the curriculum and the classroom.

MCCLESKEYSo, clearly, there have been a lot of ways over the years that people have been trying to increase financial literacy education for kids. But, given that legislatures are looking at mandating class -- standalone classes in financial literacy, it seems like the idea is out there that we need to do more. Annamaria Lusardi, in your research, what is -- what have you found to be the best way to accomplish financial literacy education?

LUSARDIWell, certainly, I want to echo what has been done before that is critically important for the teacher to be trained. And so, in order to be effective, we really do need to have trained teacher who know this topic, and the teacher themselves after (unintelligible) that they don't know this topic enough. So, I think, for financial education to be effective, that's an important way to do it. I also think it could be important to add this financial literacy concept in other topic as well, and particularly for, perhaps, the courses or the state that didn't mandate financial education.

LUSARDINow, there are lots of concept that can be added into a math course, into a history course, and so there -- we can -- and we have actually designed a module that can be versatile enough that can be added throughout the curricula so that a little bit, almost like the park, people can find example. In fact, even when you look at history, you know, you can explain some event because of economic forces or because of other market were working and things like this. So I hope that we keep this topic not just in one course only, but we can see that their application is really much more extensive.

LUSARDIAnd I also want to echo what was said before, that we also need to make it engaging and fun. And one of the things I have done together in -- one of the work we are supporting is the work of Doorways to Dream, which have designed financial literacy games. And, you know, you can learn, again, using the same principle through simulations. And by, actually, repetition, you can actually learn concept like interest compounding, what happen to you if you spend too much and so on. So, I think, there a lot of ways in which we can be effective in doing financial education program in the schools.

MCCLESKEYAgain, hard to find people who think we shouldn't be teaching financial literacy, but there are some disagreements about how to go about teaching it. One issue that's risen in Virginia is that requiring a course does take away then an elective that students would have had otherwise. We're going to take a short break here in just a couple of minutes, but we will look at that issue as well as others when we return.

MCCLESKEYJoining me in studio for this conversation about teaching financial literacy in school, it's Annamaria Lusardi, professor of accountancy and economics at George Washington University School of Business, also, Ed Grenier, president and CEO, Junior Achievement of Greater Washington, and Tina Lambert, founding chair and board member of Virginia JumpStart Coalition for Personal Financial Literacy and vice president of the Virginia Society of Certified Public Accountants, joining us by phone from Richmond, Va.

MCCLESKEYI'm Matt McCleskey, your local host of "Morning Edition" here on WAMU 88.5. I'm sitting in today for Kojo Nnamdi, and we'll continue our conversation after a short break. Stay tuned.

MCCLESKEYI'm Matt McCleskey, local host of "Morning Edition" here on WAMU 88.5, and welcome back to "The Kojo Nnamdi Show." I'm sitting in today for Kojo. We're talking with Annamaria Lusardi, professor of accountancy and economics at George Washington University School of Business, also, Ed Grenier, president and CEO of Junior Achievement of Greater Washington, and Tina Lambert, founding chair and board member of Virginia JumpStart Coalition for Personal Financial Literacy.

MCCLESKEYAnd we're talking about financial literacy education and the new requirement in Virginia to have a standalone course required to graduate, standalone course, that is, on financial literacy. You can join this conversation by calling 800-433-8850. That's 800-433-8850. Or give us an email at kojo@wamu.org. Do you support the idea of a mandatory high school class in financial literacy? Let us know. Let's go first to Pete from Solomons Island, Md. Pete, good afternoon, and thanks for joining us on the show.

PETEHey, thanks. Yeah, I think it's a great topic and pretty deep. But, just specifically, I wish that in school, I would have learned more about credit cards. And I think it's important for people to learn about them. You know, they could learn it at home, but I don't know that home's the best place for it, for everyone because not everyone knows about credit cards. But I got myself in a little trouble with my first credit card when I got to college 'cause I just didn't know anything about it.

PETEAnd I think, as big a part of our financial life that credit cards are now, it's important, very important for kids to know something about them going into it.

MCCLESKEYWell, Pete, do you remember, in your -- on education, any other courses addressing financial literacy at all?

PETEWell, certainly, mortgage. Teaching kids about mortgage and how it works and -- that can be such a huge part of somebody's life. And they can get themselves in a lot of trouble with one, or they could build themselves a nice nest egg with one, depending on approach and, I guess, kind of home or property they buy. So mortgages and credit cards, I think, are absolutely critical financial tools for adults, and that adolescents and high school kids should definitely, at least, get the basics down about them.

MCCLESKEYAnd when you were coming along, you felt like you did not get that all? Is that correct?

PETEWhat's that? Oh my gosh, no. When I was in school, it was a long time ago. But, no, I didn't get anything. I mean, they were still trying to teach us about sewing and cooking, for crying out loud, which is, you know -- that's not really something I needed. I needed to know more about finance.

MCCLESKEYAll right. Well, thanks so much for taking part, Pete. And thanks for calling in the show. So sewing and cooking, of course, great to know, but also great to know about financial literacy. Ed Grenier, do you hear from a lot of people like Pete who said they did not get enough financial literacy education growing up?

GRENIERProbably the number one comment I get when people come for a tour, or they volunteer and they spent time at Finance Park, is, I wish I had this when I was a kid. I hear that literally every day. It's interesting, just on the point of when to teach this.

MCCLESKEYMm hmm.

GRENIERYou know, I find myself reflecting. At one point we all had to learn one plus one before we could take algebra eventually. And so these concepts, while I think it's important to teach in high school, I want to echo what Anna's saying, is that, you know, in elementary school you need to just kind of understanding of it. In middle school, you need to explain it -- be able to explain it to others. These are how the standards are written. And in high school, you need to be able to have the debate around these principles.

GRENIERAnd, I think, if you're not teaching this in a sequential way that builds on itself over time, I think, we're leaving something on the table. So -- but back to, you know, the question you asked Pete and what Pete said, I probably hear that every day of my life since we opened up Finance Park.

MCCLESKEYMm hmm.

GRENIERYeah.

MCCLESKEYWell, I'd to like turn back to Tina Lambert in Virginia now as well. One of the criticisms of the new requirement saying that students do have to take a financial literacy course to graduate was that it takes away another elective that they might have chosen to help get in the college that they wanted to get into might make them more attractive as a candidate there. What -- how do you counter that argument saying that it does take away from what otherwise students might want to do?

LAMBERTI mean, I think that that's a very good question. And, in Virginia, I know that in the advanced studies diploma, as well as in the standard, when they updated the graduation requirements to include the one credit course in economics and personal finance, they also added an additional elective, so -- to the requirements, which, of course, keeps that slot open for students to take art, band, and other things.

LAMBERTSo those folks who are getting the advanced studies diploma in particular, who are college bound, are already taking an additional elective in addition to the economics and personal financial literacy course.

MCCLESKEYAnd correct me if I'm wrong, but some of the districts around Virginia, and, I believe, some in Maryland as well, were already doing a course requirement for financial literacy but not statewide. Is that correct?

LAMBERTThat's correct. The initiative in Virginia really began on the local level. Back in 2006, the Salem City Schools, down near the Roanoke, Va. area, decided on the local level that they wanted to implement a graduation requirement in financial literacy, went to the state board and got that approval. Since that time, lots of additional -- other school districts on the local level had begun developing their own standalone graduation requirement. And, therefore, when the board of education began to look at this issue, they saw that the momentum was building already on the local level.

MCCLESKEYLet's go back to the phones now. Sherry joins us from Howard County in Maryland. Good afternoon, Sherry. How are you?

SHERRYGood afternoon. Thank you for allowing me to speak. I'm a teacher here in Howard County. I've been teaching for many years, and I do have a ninth grader. I'm going to speak for a lot of parents. They're including an additional year of math in high school for these students. Now, a lot of these students are not geared towards math or sciences or engineering. They don't need calculus, per se. It would be so much more reasonable to allow, instead of that fourth year of maybe calculus or even a higher level of math, that they be able to take this in lieu of that.

SHERRYInstead of toying with the electives, allow them to take this in that fourth year of math because this is hands-on. I have a lot of experience with finance. I'm a single parent. It's very important these kids be able to do this. I know that there are a lot of children who graduate from high school -- they can't read their paycheck. They have to have their parents tell them what everything means.

MCCLESKEYAnd you're a teacher. What subject do you teach, Sherry?

SHERRYI teach ESL.

MCCLESKEYOK. Well, thank you so much for calling and joining us. I'd like to turn now to Ed Grenier. And, Ed, again, you hear from a lot of parents as well, saying that their kids need to be taught financial literacy.

GRENIERYeah, we -- it's just basically the same as all the people that visit Finance Park. A lot of the volunteers there that day that are parents, and -- you know, it's interesting. If I was to flip your question around, it's amazing how many stories we hear from parents about when their children got home after their day at the simulation at Finance Park. And, you know, there's a lot of funny stories, you know, wanting to give back my cellphone. I don't know if that actually ever happens.

GRENIERBut we do hear from parents about how all the light bulbs and the energy around, what the students learned that day, how much it meant to the students and what they really learned. But, yeah, you -- I would say, uniformly across the board, all parents are coming behind us.

MCCLESKEYMm hmm. I'll read an email from Elaine in Annandale. She's a parent who does not like this new Virginia requirement. She says, "My daughter will have to take the personal finance class before she graduates." She says, "I disagree with the idea that this cannot be taught as part of other classes," and she says, "such as English, history and math. My daughter will be in 10th grade this fall, but no class has been set up yet. By the time the class is available, she won't have room in her schedule for another class.

MCCLESKEY"To take it online would be too expensive and would take too much time while she's also taking part in some other things like band and sports." She says also, "I read the requirements for the class on the Virginia website, and a very small part of the class will be on personal finance. And it says it'll be mostly about global finance policy and not personal at all." So she believes it's being misrepresented. Tina Lambert, can I throw that question to you? Is it going to be more global finance, or is it going to be personal finance? Is it going to vary school district to school district?

LAMBERTThe way that the course is set up is that half of the course will be on personal finance, so it will be on things like savings, investing, insurance, credit, all of those basic money management topics. And then the other 50 percent of the class would be on economics, which would include more of the global topics.

MCCLESKEYWell, of course, recently, economics globally has been such an important news story going on with the worldwide downturn, of course, the downturn here in our economy as well and now the recovery. Annamaria Lusardi, are you seeing more people call for financial literacy education as a result of what's been going around the world in the last few years?

LUSARDII have to say if there is one good aspect of the financial crisis, it has taught us how expensive are the cost of financial illiteracy and what are the consequences of people, for example, engaging in contract they did not understand or engaging in financial instrument that really didn't work out for them. So I actually do see a much stronger demand for financial literacy. And I also want to note that, for example, do (unintelligible) their program for international student assessment?

LUSARDIThe program that, for example, measure how well student, 15-years-old student are doing in math and in the sciences. Actually, this year, in 2012, they have added a module on financial literacy. As a recognition, I think that, you know, financial literacy has become this essential skill that young people need to have to be able to live in society. And so, in the same way, we are measuring their ability to read, to do calculation, to understand sciences. Now, we are also measuring their ability to understand financial -- the financial world we live in.

MCCLESKEYMm hmm. Well, a couple of the parents we've heard from so far this hour, one, of course, from Maryland saying it should be incorporated into a new fourth year math class, another in Virginia saying incorporate into other classes as well. I was struck by what you were saying a little bit earlier about the importance of incorporating financial literacy into other classes, but also the importance of treating it as a discipline on its own. How do you put those two together where it can be both integrated but at the same its own discipline?

LUSARDII think, we want to emphasize it's seen -- it is an important topic by itself. Of the word financial literacy, I like the second word. I actually think of financial literacy almost like the equivalent of reading and writing in the past. And I always say, as it was impossible in the past to live in a modern society without being able to read and write, so, today, I think, it's not going to be possible to live in society -- without adding that type of financial literacy as also the people who have come on the phone have said, you know, I really need to know about credit card.

LUSARDIThey need to know how mortgage work. And I would say, for high school student, they need to know what's the return on education so they can make a good decision about whether or not to go to college, potentially, one of the most important investment of their life. So, I think, by itself, I think, it is an important concept and topic, which, I think, does deserve a course. But we can also add it in other courses to understand that it is relevant and can be added separately in module.

LUSARDIAnd, I think, you know, this can be complement. And if it's not possible to have a separate course, then perhaps adding it and sprinkle it in other course is one way in which student can still learn this topic. But I think alone, it might probably be the most effective way for people to learn and to see its relevance.

MCCLESKEYWell, you mentioned the decision about whether or not to go college. Of course, that's a decision with very important financial ramifications when you think about student debt, of course, for private school versus a public school or whether or not one can afford college at all. So I imagine that sort of ups the ante, if you will, on learning about financial literacy.

LUSARDII think, actually, this -- if I have to say, you know, the reason why to have financial literacy. In high school in particular, I think, actually, this is one of the important reason. We need student to be knowledgeable about this very important decision they are actually going to make in -- at that time, which is going to college. And, you know, think of the implication of going to college in a moment in which also we see divergence in wages.

LUSARDIAnd, by the way, when we look at the unemployment rate now, it seems that the unemployment rate, if you look at the people with a college degree, is so much lower than without the college degree. So, in a sense, to be able now to have a good stream of wages, going to college is so critically important, but also think of the financial implication of going to college and the necessity to deal with that in that management in student loan. So, you know, we need to -- we need student acquire the skill before they go to college.

MCCLESKEYLet's hear from another parent now of a high school student in Virginia. Leslie from Oak Hill, you're on the program. Thanks for calling.

LESLIEYes. Thank you for taking my call. I'm very sorry that I missed the very beginning of this program. But I currently have a 16-year old at Oakland High School taking an economics and personal finance class. I have a 22-year old who's graduating from college this year, who took the same class when she was at Oakland. And I just think it is one of the most important classes that my children will take during their high school careers. I don't think you can survive today without basic knowledge of credit cards, mortgages.

LESLIEThey're actually even covering some macro and microeconomics in the class that my 16-year old is taking. And I completely support Fairfax County and Virginia schools in implementing this. I think it's crucial.

MCCLESKEYWell, thanks for your call, Leslie. Let's go to Jack in Washington, D.C. Jack, thank you so much for joining us. Well, we seem to be having a bit of a trouble getting Jack on the line. We will try to get the phones back up and operating in just a minute. First, though, I'll turn to Tina Lambert. Tina Lambert, there are voice in Virginia speaking in favor of the new requirement, asking students to take a financial literacy course before graduating. Are you hearing from a lot of parents who echo that sentiment?

LAMBERTWe've definitely heard from a lot of parents who are very much in support of the course. In Virginia, we do have the approach that you were talking about.

LAMBERTThey are covering the topics in -- all the way from elementary and middle schools through a variety of courses sprinkled through, but then have really taken that next bold step in understanding that right before a student is getting ready to go out into college and face all of the realities of the economy, that they're really getting a standalone approach to learning the money management topics as well as, the parent said, economics topics, which are also very important in looking at the financial crisis that we've been facing in our country.

MCCLESKEYI'm Matt McCleskey, local host of "Morning Edition" here on WAMU 88.5. I'm sitting in today for Kojo Nnamdi. We're going to take a short break in just a minute. We're speaking with Tina Lambert, founding chair and board member of Virginia JumpStart Coalition for Personal Financial Literacy. Also, Ed Grenier, president and CEO of Junior Achievement of Greater Washington, and Annamaria Lusardi, professor of accountancy and economics at George Washington University School of Business.

MCCLESKEYShe's also the editor of "Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs." And we'll be back on just the other side of this break. Stay with us.

MCCLESKEYWelcome back to "The Kojo Nnamdi Show." I'm Matt McCleskey, local host of "Morning Edition" here on WAMU 88.5, sitting in today for Kojo Nnamdi. And you can join this conversation about financial literacy by giving us a call, 800-433-8850. You can also send us an email at kojo@wamu.org.

MCCLESKEYAgain, joining me this hour, Annamaria Lusardi, professor of accountancy and economics at George Washington University School of Business, Ed Grenier, president and CEO of Junior Achievement of Greater Washington and Tina Lambert, a founding chair and board member of Virginia JumpStart Coalition for Personal Financial Literacy. Of course, we've been talking this hour about Virginia's requirement now for ninth graders and ninth graders this year, before they graduate from high school, having to take a standalone course in financial literacy.

MCCLESKEYWe've also talked about some models that began earlier than that. And, Ed Grenier, during the break, you were mentioning, with, of course, advertising targeting younger children than those in high school, many spending habits begin in the earlier years. Then that means, for you, it's more important to start early with financial literacy education.

GRENIERYeah. It's back to theme of sequential learning and building on what was discussed or taught in years previous. And so by limiting programming until middle to upper high school, I think we're leaving on the table the opportunity to address the need for financial literacy education when students actually are developing their spending habits. You know, I kind of chuckle, but I have a 13-year-old. And, you know, those spending habits have already been developing for a couple of years. I see them.

GRENIERAnd, you know, coupling that with, you know, spending a day at Finance Park and listening to the conversations that the students are having among themselves, again -- 'cause they're in the moment there. They're learning when they're not knowing, but just listening as a fly on the wall, and it's easy to do that because they're so engaged. And they don't really notice the adults in the background -- you can hear the conversations about what their family does, about what they do.

GRENIERAnd they're already modeling themselves in different ways. And so by not addressing, I think, middle school, specifically -- and you hear that in a lot of different conversations around education -- I think we're missing an opportunity to at least begin modeling their behavior.

MCCLESKEYWell, one thing we haven't mentioned yet is that, given that everyone seems to assume some sort of financial literacy education in the schools is a good thing, the differences are more in how to do it rather than -- rather to do it. That's assuming that it's something that perhaps not getting at home. And, Annamaria Lusardi, are parents qualified to do financial literacy education? Well, of course, many parents have a mortgage. Of course, we have credit cards. Where -- what can parents do, and where might parents fall short?

LUSARDICertainly, I think that parents are important to reinforce financial education in the school. But, as we were discussing before, you know, not every teacher, probably, is qualified to teach financial literacy in school. So I think we have to be careful. When we look at the parents is, you know, not every parent might have actually the financial knowledge or expertise to teach the children in the same way in which not every parent can teach science to their children. And so, you know, I think I wouldn't recommend to just leave it to the parents to teach financial literacy to the children.

LUSARDIAnd it's also, I think, reflected in the current statistics we see in the state in which financial literacy is not required, that, when you look at, you know, who are the students who are financially literate, if they don't get it in the school, well, they are going to get it from the parents. But what we find is it's mostly the children with college-educated parents that seem to have a higher financial knowledge, so one of the other reason why it might be important to have financial literacy in the school is to that every children has an opportunity to learn.

MCCLESKEYSo there's been research looking at the demographics of this. You mentioned that college-educated parents perhaps some raise children who are most financially literate. How does that translate then to perpetuating the -- perhaps the lack of financial literacy?

LUSARDII think if we don't have financial literacy in school, one of the consequences is we're going to start unequal, in an unequal basis and probably grow even more unequal. And, interestingly, in almost every statistic I've seen, both in the U.S. and other countries as well, is that the group who seems to be more financially literate are always a very specific group.

LUSARDIAnd perhaps they are more the privileged group, which are mostly the white male, not only from college-educated family but also from family with retirement savings and stocks and were investing in the stock market when their children were growing up. So, you know, the implication of that is that perhaps only a small group is really able to access financial knowledge and, you know, we do want to have this opportunity for everybody.

MCCLESKEYLet's go back to the phones. Susan, calling us from Washington, D.C. Susan, thanks for calling in.

SUSANHi. I just wanted to agree with -- wholeheartedly with the idea of having financial literacy at every level of education. I'm a professor. And I had taught a personal finance class at Rutgers for a number of years. I'm now a professor at Temple. And one of the issues that we encountered in the university setting was the challenge to us of having this academic content in a financial literacy class at the university level.

SUSANAnd I would argue that, in fact, financial literacy involves understanding a variety of different kinds of mathematical concepts, not only basic math, calculations of present value and -- like that, but it's sort of -- it's understanding probability theory and able to understand the nature of risk itself because if you think about the kinds of financial products that we're exposed to, whether it's the question of needing to get, for example, a high -deductible health insurance policy versus one that covers more things or the fact that very few people receive conventional pension for.

SUSANAnd instead we are -- you know, have to deal ourselves with the risk of having to save in a 401 (k), or we have the choice between things like an adjustable versus a variable-rate mortgage. I would argue that understanding probabilities and the nature of risk is now inherent to our ability to be financially literate. Thank you.

MCCLESKEYThank you for your call, Susan. Annamaria Lusardi, you've taught at the college level as well. Has that been your experience?

LUSARDIThis is -- risk is a critical concept, and, certainly, when we move at the college level, we can afford to talk about a lot more sophisticated concept. And, I think, eventually, what we really want to do is (word?) the concept that allow people to make financial decision. And risk is critically one of the most important component of financial decisions but is also one of the most difficult concept. And we certainly need to have that in any of the financial literacy course. So this is, of course, a component of the courses we teach in college.

MCCLESKEYLet's take another call now from Kaye (sp?) in Washington. Kaye, you're on the air. Go ahead, please.

KAYEHi. My name is Kaye, and I wholeheartedly support financial literacy classes. I think that it's as important as math and English. I have been an informal financial adviser to friends that make six figures, that are in financial trouble, and to -- I'm a landlord -- and to prospective tenants that make anywhere between $45- and $100,000. And what I find is when people apply to rent a house, they have no idea whether they can afford it.

KAYESo I ask the questions. I say, well, what do you make? What do you bring home? And then I said, OK, let's subtract the rent, and then let's subtract your utilities, and then let's subtract your car payment. And they go, oh, gee, I can't afford this. And I've had people thank me for going through these figures with them. They say, I had no idea. And then the same thing happens with my friends that make six figures. They have no idea either. So, I think, if you're going to get through life, it doesn't matter how much you make if you don't understand how to spend it.

MCCLESKEYWell, thanks, Kaye, for your call. I'd like to turn back to Tina Lambert now in Virginia. Tina, we've been talking, of course, this hour about Virginia's new requirement for graduation. Virginia is the fourth state to require high school students to take a semester-long finance class. The other is Utah, Missouri and Tennessee. Do you think there's growing interest nationwide in teaching finance in the schools? Are you hearing this from other corridors as well?

LAMBERTI believe there is. There's been lots of research on the national level that has shown how effective a standalone course can be in infusing the knowledge in our students. And when we have national meetings of, say, the JumpStart Coalition on the national level, many states are asking about how Virginia, Tennessee and others made this happen. We've seen even from Maryland taking that bold move and trying to make that happen in their state.

LAMBERTAnd there's just lots of conversations going on. JumpStart on the national level have been doing a bi-annual survey of high school seniors. And in Virginia example, the last time our seniors took that test, they scored 48 percent, which is a failing score, on basic personal finance and money management topics. This was just one of many data points that helped our board of education determine that that standalone class would be the most effective place for our high school students to be.

MCCLESKEYEd Grenier, I understand you've been talking to several more school districts around this area about bringing your financial literacy program to their students. Now, it's not a standalone class, but still it looks like an expansion. Has that been the case?

GRENIERYeah. It's interesting. We had this conversation with Fairfax. We piloted probably for three years, and then when we opened last -- two Octobers ago. Once we opened and the -- the program and the media started covering it, parents got involved, and other educators saw what we were doing. And, I think, what really attracted interest from other school systems was the way the simulation brought to life the curriculum. And so we're in very serious conversations with a couple big counties. I -- you know, our Junior Achievement operation is Greater Washington.

GRENIERAnd then we're talking about Maryland. There's a lot of other activities going on in Maryland with our Baltimore office. But, specifically speaking, with Montgomery and Prince George's County, we're in very serious conversations with them as well to do something similar because it's that hands-on experiential -- it's the simulation aspect of the curriculum that gives the students the ability to implement and to act out and to live the curriculum in a way that lets them make the mistakes before they're, you know, out in the real world, making mistakes.

MCCLESKEYMm hmm. Having actual financial ramifications at that point.

GRENIERExactly. Exactly.

MCCLESKEYLet's go to Jim in Crofton, Md. Jim, you're on the air. Thanks for calling.

JIMHey, how's it going? I'm a little nervous. I've never called a radio station before, but...

MCCLESKEYWell, thanks for calling in. Go right ahead.

JIMI love listening. I listen every day. I'm 56 years old, and I'm getting a little cynical. But I just find it interesting that we're talking about financial literacy in these classes in the year 2012. I graduated from high school in '74, and it's funny one of your former callers mentioned learning how to sew. And I remember cooking a turkey one Thanksgiving when I was in high school. Never learned anything about finance, and I just -- hopefully, I can put this comment clearly.

JIMI think there's a fear somewhere that the more our kids learn about the real nature of finance in this world and become more literate, that there's a fear amongst politicians. There's a fear amongst an elite group of people that that's going to be problematic because there are some things going on. Like I say, I hate to be cynical. But you pique a young kid's interest, and he starts looking into some of the things like, I don't know, the Federal Reserve or any of a number of things that a financial literate person would begin to look into.

JIMI believe that there are certain areas that I wouldn't be too excited about. That's just a different slant on your conversation...

MCCLESKEYWell, thanks for the call. Thanks for the call, Jim. Annamaria Lusardi, is there anyone that stands to benefit from tamping down financial literacy?

LUSARDII'm not so sure. You know, I'm not so sure that ignorance is really what helps. And, I think, in the long run, it doesn't help anybody. I think it doesn't help the bottom line. And I also want to say that we are actually very proud that, next month, actually, Ben Bernanke is going to come and teach a course at the George Washington School of Business about the role of the Fed. So I think the Fed itself is really interested in letting everybody know, and the public and the student know, you know, what's the role of the Fed in society.

MCCLESKEYPresumably, it would seem also if -- the counter-argument to that perhaps might be if more people are investing and growing their wealth, the rising tide would raise all ships, presumably.

LUSARDIYes, very much so. And I also want to echo what other speaker or people have called in, have said, which is, you know, we live in a very different world, a world of individual responsibility, right, where people have to make important decision all the time, and, you know, even at a very young age, you are confronted with credit card and other important decision. So we need student to have the skills to make those decision. And ignorance, in my view, only hurts.

MCCLESKEYWe have an email here from Isaac, saying he's a recent college graduate who's experiencing financial matters like credit cards, loans and renting for the first time. He says, "I wish I've been able to take a financial literacy course in high school. I suspect that would have been more comfortable than learning on the fly." He asks, "How did we go from most high schools not even offering such financial literary -- literacy courses to now requiring students to take them?" What's been the trajectory, Annamaria Lusardi?

LUSARDIWell, the trajectory has, indeed, been about this requirement, but I think it has been so unequal across the states. And so, you know, I actually don't think that there are very different economic conditions in the state that require this disparity. You know, clearly, there are issues about cost, and there are issues about, you know, where we put financial literacy. But, you know, we certainly see an increase in potentially even more school and parents demanding these courses.

LUSARDIAnd, certainly from abroad, we actually see that so many countries are being so proactive in adding financial literacy in the school, not just in the developed country, but even in the developing ones.

MCCLESKEYAnd it can certainly vary from country to country, but also, as you said, from district to district and state to state. One last email here from Pam in Bethesda. She says she took a course in economics as a senior in high school in Sun Prairie, Wis. in the early '60s as a newlywed. A few years later, she says she was shocked to find that her husband, a graduate student in physics at an Ivy League school, didn't know how to balance a checkbook or prepare anything more than short form tax filing.

MCCLESKEYSo it can vary quite a bit from place to place. I want to thank all our guests here for joining us. Annamaria Lusardi, professor of accountancy and economics at George Washington University School of Business, who's also the editor of "Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs." Thanks for being with us.

MCCLESKEYAlso Ed Grenier, president and CEO of Junior Achievement of Greater Washington, and Tina Lambert, founding chair and board member of Virginia JumpStart Coalition for Personal Financial Literacy, and vice president of the Virginia Society of Certified Public Accountants. I'm Matt McCleskey, sitting in for Kojo.