St. Charles Herald-Guide

Teach parish kids about $$ before they go broke

By Derek Clontz - January 10, 2007

BOUTTE - Believe it or not, more young people file for bankruptcy than graduate from college - and that's why St. Charles Parish School Board member-elect Alex Suffrin has named "financial-literacy classes" as a priority when he takes office on Jan. 16.

"The statistics are frightening," Suffrin, a certified public accountant, told the Herald-Guide in an exclusive interview at our offices on Highway 90.
"And that’s why it's so important to make sure our children understand money. We need to show them how it works, what it takes to get it and what it takes to keep it.

“We have to teach them about credit and credit cards, how to develop a realistic budget, how to set savings goals, and how to track their income and live within their means."

If they don't learn these things - and learn them well - the consequences could be devastating, says Suffrin.

Deep debt, financial insecurity, the inability to buy a home or start a business, bankruptcy - those are just a few of the difficulties our children might face if they don’t learn the proper uses of the million-plus dollars they, on average, will earn over the course of their lifetime.

A "Free Enterprise" class mandated by the Louisiana State Legislature in 2003 includes some information on personal finance.

But Suffrin believes it can be beefed up. And with the support of the school board after he assumes office on Jan. 17, he wants to expand and improve the financial literacy aspects of the course.

"We're teaching 'personal finance' now in the free-enterprise class," he says, "and it's a good class and a great idea.

"But I want to make sure we're focusing on the basics of financial literacy. We might very well need to offer more than what's in the class now.

"I'd also like to see more classes - and more-advanced classes - offered to our students," continues Suffrin. "It's important for us to develop a comprehensive curriculum to go above and beyond a single course.”

The need for a strong financial-literacy program in the schools is spelled out with crystal clarity in statistics that might surprise you, says Suffrin.

"The average teenager spends $103 a week," he explains. "But not all of that is coming from a part-time job or the allowance the kids might be getting from their parents.

"Children as young as 12 and 13 are getting offers from credit card companies, and 11 percent of children ages 12 to 19 actually have their own credit cards.

"That's not necessarily a bad thing - credit cards are wonderful if you manage them properly. I use them myself.

"But for credit cards to make sense, you have to understand interest rates and the high cost of carrying

a balance. Without that understanding, we're tempted to outspend our income. And that can result in debt that's out of control."

Children are particularly vulnerable to financial mistakes because they are, by definition, inexperienced, and, unless they are especially mature, impulsiveness can adversely influence their spending, Suffrin says.

"If a student is going to use a credit card, I suggest that he or she do what I do - pay off the balance every month," he continues. "Otherwise they can end up at a point of no return with debt they'll never be able to pay off.

"How real is that threat? Statistics over a one-year period show that more young people filed for bankruptcy than graduated from college."

Alarming? You bet. But even though Suffrin furrows his brow and shakes his head when citing the numbers, he makes it clear he isn't "anti-debt."

In fact, he says, for mature and responsible students, debt can make sense.

Loans for college speak for themselves - the increased earnings promised by higher education can make them a good "investment" when they are carefully chosen and the payback carefully planned.

Even high-school students who work and buy their own cars are building credit, adds Suffrin, and that's not a bad undertaking as long as they borrow only what they can reasonably expect to pay back based on their income. And they need to budget so they can always make their payments on time.

"A strong financial-literacy curriculum can help our students make good decisions about money now and in the future - this is a message they will carry throughout their lives," says Suffrin.

"But don't get the wrong idea - financial literacy isn't only about debt.

"To live successfully in the modern world, our children need to understand their rights and responsibilities in renting or buying a home, how to manage their money in order to make the leap from renter to homeowner, how to invest their income wisely, how to budget, how to plan for retirement, how and where to save and how much to save, how to manage a bank account, how to balance a checkbook, and even how to start their own business."

As a financial expert, Suffrin speaks with authority, conviction and a passion that's as intensely determined as he is.

That's because he knows the feelings of security, peace of mind and self-esteem that come from good financial planning - and the horrors that ensue when ignorance or recklessness lead a person into financial quicksand.

Teaching St. Charles Parish children how to handle money is right up there with "readin', 'ritin' and 'rithmetic," he says, adding that there is "one more" money issue that's important to him.

"Making sure our parish teachers are getting the highest possible salaries is another priority when I go to work with the school board in January," he says. "That way we keep the great teachers we've got, and attract the best talent available when we bring new teachers in."
 
3 BIG mistakes kids make with money

Mistake 1. Using credit cards to buy things they can't afford.

They accept cards without understanding the responsibilities that go with them, and the next thing you know they're $7000 to $8000 in debt. Solution: Learn about the high cost of debt and pay off balances monthly.
Mistake 2. Neglecting to set up a savings plan.


The money they get "burns a hole in their pocket" and they spend it as fast as they can get it without setting anything aside. Solution: Investigate savings and investment options - and start taking advantage of them.

Mistake 3. Failing to establish a budget.

Even a child living at home with parents has some expenses, but kids often can't keep up with them because they spend money willy-nilly. Solution: Jot down income and expenses and establish a budget.

SOURCE: Al Suffrin, CPA, St. Charles Parish School Board member-elect