Many Vermonters are in a financial funk. Some are suffering the continuing effects of the Great Recession; others never really learned the basics of personal financial planning in school or in life; and some are in for a rude awakening when it comes time to pay for college, buy a home, or retire. While many states offer financial literacy training to prepare their citizens for the complex world of savings, spending and financial survival, Vermont has fallen behind.


Why does it matter if Vermonters have financial skills? The reason is quite simple. Financial literacythe ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial well-beingis crucial for the economic growth and prosperity of Vermont and Vermonters.

As former President Bill Clinton recently stated, financial literacy is “a very fancy term for saying spend it smart, don’t blow it, save what you can and know how the economy works.” Financial literacy, like reading, writing and arithmetic, builds “human capital” by empowering individuals with the ability to create “capital for humans” to use in their lifetime – for buying a home, going to college, having a rainy day and a retirement fund. By helping Vermonters save and live within their means, we are also helping our society generate capital that can be invested back into our local communities. That is why having financially sophisticated citizens is in everyone’s best interests.

Vermont students and adults need a clear path to building their personal finance knowledge and skills. Vermont needs to increase its focus on helping Vermonters become wiser consumers, savers and investors. Financial literacy education is not a handout; rather, it is a helping hand that gives individuals the knowledge and skills that can lift them out of a financial problem, or prevent difficulties from occurring. Vermont can, and must, do more to increase the financial literacy of its citizens.


Vermont’s K-12 Students Need Help

Financial sophistication is an essential 21st century life skill that young people need to succeed, yet recent studies and surveys show that our youth have not mastered these topics. For example, a recent survey by Vermont Works for Women indicated that young women believe that a lack of personal finance training was a major deficiency in their education.

The basics of personal financial planning  teaching young people about money; the value of money; how to save; invest and spend it and how not to waste it – have not been taught in school or at home. Without improved financial literacy, the next generation of Vermont leaders, job creators, entrepreneurs and taxpayers will not have the skills they need to survive and to thrive in this increasingly complex financial world.

On paper, personal finance education is required in our K-12 schools. Vermont’s Framework of Standards and Learning Opportunities clearly requires that students be taught how to make informed decisions with regard to personal economics and career choices.

Currently, no one in Vermont is focused on how all of our schools meet these personal finance educational standards. Frankly, the data is lacking, there is a lot we do not know and the fear is that at some schools these topics may not be taught at all.

These standards were written in the year 2000, have not been revised or revisited over the last 14 years and are not very specific. By comparison, the educational standards for the topic of sustainability are three times more detailed than those for personal economics, and twice as detailed as those for career choices. This lack of clear and specific personal finance educational standards may negatively impact the importance that these topics are being given at some of our schools. Given this background, it’s  not surprising that Vermont high schools received a grade of D for their efforts in financial literacy education in a national financial literacy report card.

We applaud the schools that are doing an impressive job teaching personal finance. Pockets of excellence in financial literacy education exist across our state, thanks to the efforts and passion of smart educators, administrators, school boards and the Office of the Treasurer. Our challenge is to spread these great educational practices to all Vermont K-12 students.


Vermont’s College Students Need Help

If our young citizens are not learning about money in our K-12 schools or in their homes, surely they must be learning this important life skill at college. Sadly, they are not.

Except in some targeted programs and occasional courses, most Vermont college students are not offered much in the way of financial literacy education. Personal finance education often consists of brief mandatory entrance and exit counseling for students with federal loans, along with reminders to Vermont students to repay their loans (which averaged $28,299 for the two-thirds of the graduates of 2012 who had loans).

Today's college graduates need to be financially sophisticated because they face greater challenges than previous generations experienced. Many are worse off than their parents were at the same age, with more debt and stagnant or lower incomes. They have higher unemployment rates than older citizens, more live at home with their parents, while fewer own a home, have children or are married. A lack of financial skills is clearly a factor in the failure of many in this generation to launch, and is having a substantial impact on our overall economy.


Vermont’s Adults Need Help

Vermont adults are struggling. Nearly half have subprime credit ratings, nearly two-thirds don't have rainy day funds for emergencies or have not planned for retirement, and more than half either live paycheck to paycheck or are spending more than they earn. Less than half of Vermont adults participate in an employment-based retirement plan.  What kind of retirement is in store for them?  


Vermont Needs an Action Plan for Financial Literacy

Vermonters need the skills and tools to take control of their financial lives. Studies have shown that financial literacy is linked to positive outcomes like wealth accumulation, stock market participation, retirement planning and avoidance of high cost alternative financial products.

When they graduate, Vermont high school students should, at a minimum, understand how credit works, how to budget, and how to save and invest. College graduates should understand those concepts in addition to the connection between income and careers, and how student loans work. Vermont adults need to understand the critical importance of rainy day and retirement funds, and the amounts they will need in those funds.

This report includes a series of recommendations for government officials, educators, employers and nonprofit organizations.  We believe that the recommendations of this Task Force, once implemented, will materially increase the financial knowledge of all our citizens and enable them to make positive changes in their personal and professional lives.

We believe that a more financially sophisticated citizenry will help improve Vermont’s economy. Vermont’s Financial Literacy Action Plan is intended as a roadmap for policymakers, educators, and business and nonprofit leaders who seek to improve the level of financial sophistication among primary and secondary school students, postsecondary students and adults. We hope that you find the information contained in the report informative and useful.