As you may have heard many times, I feel teaching kids about money early on is one of the best things we can do to help them succeed. I've been pleased and honored to be involved in the first-ever National Financial Literacy Challenge. Sponsored by the U.S. Treasury Department in conjunction with the President's Advisory Council on Financial Literacy, this test was taken by 46,000 high school students across the country this past April and May.

To give you an idea of the challenge these students faced, here are some sample questions. You'll find the answers at the end of the column.

1. Dana opens a savings account and deposits $1,000. If the savings account has a fixed annual interest rate of 5 percent, and she makes no additional deposits or withdrawals, what amount will Dana have in her savings account at the end of two years?

A. Exactly $100

B. Exactly $1,100

C. Less than $1,100

D. More than $1,100

E. I don't know.

2. What is an advantage of a fixed-rate mortgage over a variable-rate mortgage?

A. Fixed-rate mortgages generally have lower interest rates than variable-rate mortgages.

B. Fixed-rate mortgages require lower down payments than variable-rate mortgages.

C. Fixed-rate mortgages have interest rates that stay the same, but variable-rate mortgage payments may increase.

D. Fixed-rate mortgages generally are written for a shorter period of time than variable-rate mortgages.

E. I don't know.

3. You have $400 in the bank, and $50 in your wallet. You owe $3,000 on a car that is worth $4,000. Your other personal possessions are worth a total of $2,000. You also take home $800 per week from your job. From this information your wealth — or net worth —currently equals:

A. $3,050

B. $3,450

C. $4,250

D. $7,250

E. I don't know.

Whether the answers come easily to you or not, the ideas point to some financial basics that should be a standard part of our education.

SCORES POINT TO A NATIONAL NEED

While the number of students who participated in the challenge is encouraging, a look at the scores tells a different story. The average score was 56 percent, with only a handful of students achieving a perfect score to "win" the challenge.

Clearly, we must raise awareness of the need for better financial education to a national level. Just as in the late '50s and early '60s, the President's Council on Physical Fitness began to promote good habits by creating a greater awareness of health and exercise issues. Now the President's Advisory Council on Financial Literacy is tackling today's crucial issues of financial readiness. And it's not a moment too soon.

Our country has serious problems regarding finances. Many adults, let alone kids, have no understanding of how to balance a checkbook, sift through mortgage options or manage credit card debt. But the council can't do it alone: We all need to step up to the plate to make financial literacy a real national movement.

LOCAL SCHOOLS AND TEACHERS CAN PLAY A CENTRAL ROLE

As the current test results indicate, financial education in U.S. schools is sorely lacking. In fact, only three states require students to take a course in personal finance, with another 15 insisting that financial education be incorporated into other courses. Yet, according to a recent AgeWave generational study, 95 percent of surveyed participants believe that basic financial management should be a standard part of our high school curriculum.

Encouragingly, some teachers are taking it upon themselves to fill the gap, incorporating financial lessons into every subject. Events like the National Financial Literacy Challenge give teachers an opportunity to add a financial focus to their curriculum by motivating their students to participate, enrolling them in the challenge and helping them prepare for the test. But it takes our personal involvement in our local schools to encourage both teachers and students to care about this critical topic.

YOU CAN HELP INSPIRE ONGOING FINANCIAL EDUCATION

To me, the real challenges of today's financial world are a constant inspiration for all of us to continue financial education. Whether in the classroom or in the home, learning to manage money wisely should be an ongoing focus. You don't have to be a financial whiz to have an impact. Having open discussions about money, sharing your own experience with budgeting, saving, credit and investing — even sharing your own mistakes — can give a young person some practical guidance.

Let's face it, today we see examples of poor spending, budgeting, saving and investing decisions every time we open a newspaper or turn on the TV. And the economic fallout is affecting all of us. The efforts of organizations such as the President's Advisory Council on Financial Literacy can raise the national awareness; however, it's up to us to take further action. Just as kids in the 60s had to actually get out and exercise to meet the president's physical fitness standards, today's kids must be encouraged to flex their financial muscles.

The next National Financial Literacy Challenge is scheduled for November 2008. Let's make it a personal challenge to get our local schools involved, encourage teachers to enroll their classes to take the test, and help our kids prepare for the real financial challenges they'll face in every phase of their lives.

For more information on the next challenge, go to flc.treas.gov.

(Answers: 1. D, 2. C, 3. B)

Carrie Schwab Pomerantz is Chief Strategist, Consumer Education, Charles Schwab & Co., Inc., Member SIPC. You can email Carrie at askcarrie@schwab.com. To find out more about Carrie Schwab-Pomerantz and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

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