By Associated Press
Tuscumbia AL – In an age when the nation's credit card debt is hitting new highs and personal savings are at an all-time low, there has been a greater need to teach young people how to manage finances and avoid debt.
Recent polls reported by financial expert Vince Shorb in his new multi-media course, "Financially Free by 30," show that students, ages 15-21, are unprepared to face the complex world of the 21st century and debt management.
Shorb said that while parents want to teach their children about finances, many aren't skilled enough with their own money to offer solid guidance.
Although high school business departments try to fill the gap, many schools overlook the need students have to manage their future finances, Shorb said.
"The sad part is that misdirected preparation results in a third of students ending up with a bachelor's degree and over $20,000 in debt," Shorb said.
There are exceptions. Melody Murphy, a business, marketing and finance teacher at Deshler High School, takes seriously the responsibility of teaching her students to manage money.
Murphy agrees with Shorb that 15 is the age that many students begin their financial journey with bank accounts and debit cards.
"More kids than ever before have debit cards, and swiping that thing constantly is a big temptation for any teen," Murphy said. "It's so easy to see something, pick it up and swipe that card. They don't always think through whether they really need the item or not, it's just more of an impulse thing.
"One of the hardest jobs is teaching them that debit cards aren't credit cards, where the bill comes later. It's an instant withdrawal, and they've got to keep money in the account or they'll get in trouble. They also quickly realize that it isn't like a check that takes a couple days to clear."
When Murphy began seeing and hearing about more misuse of debit cards, she created a plan of action. She began taking her students to all the banks within the downtown area in walking distance of school to talk with personnel about banking options.
She encourages them to look for a banking institution that doesn't have monthly service or check fees. She also encourages the students to seek out debit card and ATM plans that don't charge usage fees.
Because most of her students participate in a co-op program and have jobs, they need to bank their money, she said.
"I encourage them to start thinking about life after graduation and to bank their graduation money," she said. "They don't need to be tempted to put it in their pocket, because once they do, it's as good as gone."
Magan McNutt, an 11th-grader at Deshler, has had a checking account with a debit card since she was 15.
"I got the debit card because it was easier than writing checks," McNutt said. "I tried to keep a mental record of what I was spending, but I overdrew the account a couple of times. Now, I keep a written record."
Lesson learned, Murphy said.
"I see kids all the time carrying nothing but that card and they'll swipe it 10 or 15 times a week," she said.
"They intend to keep that paper receipt, but they ultimately lose it and forget the purchase. I'm big on keeping records and I'm seeing students getting better about it."
She knows students don't always have the guidance from home to make good financial decisions.
In fact, Murphy said she has had students in the past who refuse to allow a parent's name on their banking accounts because of their parents' poor financial skills.
Anyone under the age of 19 must have another name on a checking account in order to open one, however.
Heather McCollister, a sales officer for Bank Independent, said she's seen children as young as fifth grade open accounts with their parents, but the teenagers with checking accounts are certainly more common than ever.
"The teenagers often don't even order checks; they just want the debit cards," McCollister said. "We always stress to them the importance of keeping a balance with a register. Schools also ask us sometimes to come and speak to students about the responsibility involved in having an account."
McNutt, who works a 20-hour-a-week job, said she sticks to a plan with her debit card.
She only uses it a couple times a week and only for bigger purchases like clothing.
"My parents have really tried to influence me to save my money and not spend it on stupid stuff," she said. "I'm trying to learn now how to manage my money while I still have their help. I have a savings account and don't spend money from that. I figure I'll save more when I get out of high school."
Shorb recommends young people open a checking account and two savings accounts, one for long-term planning and one for fun money and immediate expenditures.
Anna Richey, a 21-year-old University of North Alabama student from Florence, said she makes it a practice to only use her checking account.
"I only use savings if it's a school emergency," she said. "I live by my debit card, though, because 90 percent of the time I don't have cash with me."
As a senior, Richey will have the expense after graduation of paying off student loans, but she has a plan for that.
"They're very low-interest loans and I'll only have two years of loans as opposed to four because I went to Northwest-Shoals Community College first and paid everything from what I'd saved," she said. "Turns out now to be a good decision."
As for her financial future, Richey is more concerned about how she'll pay for personal things like a wedding, a house and other life expenses.
"I work three part-time jobs and teach art classes and it's still hard to keep up, but as long as I'm saving a little, I guess that's something."
Shorb advises simple investments for young adults.
Combined with saving $250 per month, a freshman in college (at age 18) could be a millionaire by the age of 40, he said.
Jan Kosner, a Colbert County resident who home-schools her daughter, Angela, said she has made it a point to teach her daughter about sound financial management.
"She'll be going off to college in a year and I don't want her getting herself in big debt," Kosner said. "I also don't want her tempted by credit card offers that are already coming in the mail."
Murphy said credit card offers start coming to most students in their last semester of school, just before graduation.
"We talk about not falling prey to credit card traps, and some of my students have seen the devastation of abusing credit cards within their own families," Murphy said. "When they see parents get into financial trouble, it makes an impact."
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Information from: TimesDaily, http://www.timesdaily.com/
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