Measure seeks to beef up financial literacy in NH
Under bill, statewide approach to education would be created
“This is personal for me,” Rep. Willis Griffith, D-Manchester, recently said to the House Education Committee about a bill he has sponsored targeting financial literacy.
Griffith’s legislation, House Bill 1501, would establish a commission “to study financial literacy” and recommend “a multi-generational approach to financial education.” He recalled that he was raised in a very wealthy family reduced to bankruptcy by job loss and business failure during the recession.
“There are an infinite number of stories like mine,” he said. “Financial hardship does not discriminate.”
The bill, he explained, arose from a working group of representatives from financial institutions and nonprofit organizations who, after taking stock of existing resources, saw a role for the state in creating a program akin to NH 211 specifically for financial education.
NH 211 is a toll-free statewide, round-the-clock information and referral program for health and human services, operated by a coalition of government, nonprofit and corporate partners led by Granite United Way.
“There is a difference between making money and managing money,” said Casey Snyder, a certified financial planner with The Sedoric Group of Portsmouth, “and those who are good at making money are not necessarily good at managing money.”
Measuring how well people manage their money is a challenging task, not least because it is so personal. Among the many studies, some rely on tests, others on interviews and still others on indices of financial performance.
The S&P Global Financial Literacy Survey of 2014, based on interviews with 150,000 adults in 148 countries, found 57% of Americans are financially literate, matching Switzerland in 14th place, and a few points ahead of Bhutan and Botswana.
Another, the National Financial Capability Study undertaken by the Financial Industry Regulatory Authority (FINRA), surveyed more than 25,000 American adults and reported that between 2009 and 2018 the share of the financially literate population dropped from 42% to 34%.
In 2019, more than three-quarters of financial advisers surveyed by Investment News counted financial literacy as a “concern,” and nine of 10 said they faced the issue with clients. The National Financial Educators Council simply describes the situation as an “epidemic” while an Investment News headline read “Financial Literacy: An Epic Fail in America.”
Perhaps the most comprehensive report was prepared in 2016 by the Center for Financial Literacy at Champlain College in Burlington, Vt. The center conducted a survey of adult financial literacy in all 50 states, which applied 59 data points drawn from 18 sources to score each state on 71 indices reflecting financial knowledge, skills and behavior.
The center’s 252-page report divides the data into five broad categories — financial knowledge, total credit, savings and spending, retirement readiness and other investment and insurance — each of which are further subdivided. Each state was graded on the 71 indices.
New Hampshire ranked sixth overall with a grade of B+. But the score carries a caveat: The center applied a relative grading system, meaning that a high grade may mean only that a state is near the top of a poor class, like a grading curve.
New Hampshire scored A- for knowledge, A for total credit, A+ for saving and spending, C for retirement readiness and B- for other investment and insurance. As in most states, the report found prospective retirees in New Hampshire were not investing enough to supplement their retirement plans to replace a sufficient share of their pre-retirement income.
The poorest score received by New Hampshire was an F for student loans, based on the 76% of graduates carrying average debt of $33,310 — a number that has since jumped to $36,776, ranking among the highest in the country.
But 47% of borrowers had never made a late payment. According to Tori Berube of the New Hampshire Higher Education Assistance Foundation, despite their high levels of debt, Granite State borrowers have consistently had a very low default rate three years after graduation.
New Hampshire’s relatively high scores reflect the affluence of its population, which since 2017 has sported a median household income of nearly $75,000 — among the 10 highest in the country, while its poverty rate has consistently been among the lowest — and usually the lowest — in the country. Many indices in the report, particularly those bearing on the capacity to build savings, manage credit and service debt, are direct functions of household income.
Consequently, the report obscures the financial circumstances of more than one in five of all New Hampshire households with incomes of less than $35,000.
According to data collected in 2018 by the U.S. Census Bureau and recently reported by the New Hampshire Fiscal Policy Institute, there are some 531,200 households in New Hampshire. Approximately 22,500 have incomes below $10,000; another 17,000 between $10,000 and $15,000; 41,000 between $15,000 and $25,000; and 42,500 between $25,000 and $35,000. The poverty threshold in 2018 was $13,064 for individuals under 65 and $20,212 for a family of three.
About 100,000 residents lived in poverty, 49,000 of them at less than half the threshold and another 136,000 at less than 125% of the threshold.
Many of these households are among the 40% the Federal Reserve found without $400 in ready cash to meet an emergency. Or among the 67% of households earning less than $30,000 annually that the National Opinion Research Council reported would be unable to pay for necessities, let alone set aside savings for emergencies, if they missed one paycheck. Or among the 20% without a penny saved for retirement. And who represent approximately 60% of those filing bankruptcy.
Squeezing incomes, slow wage growth and widening income inequality have left increasing numbers of individuals and households struggling to meet their immediate needs, meaning that, for those with low and moderate income, financial literacy is a necessary, but not a sufficient, condition for achieving a greater measure of financial security.
‘Bumps in the road’
Cary Gladstone is the senior director of asset building strategies at Granite United Way, who oversees the agency’s Volunteer Income Tax Assistance, or VITA, program, which is offered to low and moderate income households at 10 sites around the state.
He described tax returns as “fertile ground” for what he prefers to call “financial empowerment,” explaining they provide a full picture of the financial circumstances of households. At the same time, tax refunds are generally the largest annual payment low and moderate income households receive and provide a significant opportunity to enhance their financial security.
Gladstone said he explains how households can use their refund to manage their debt or build their savings, stressing the strategies to acquire financial assets to withstand the “bumps in the road.” He pointed to Commonwealth, a nonprofit organization fostering financial security for vulnerable households, which sponsors “save your refund,” a program that distributes cash prizes to those who save all or part of their refund.
Likewise, Gladstone shows taxpayers how to apply the tax code to best advantage by claiming whatever deductions and credits for which they qualify. For instance, only one in five eligible households claims the Earned Income Tax Credit and they may qualify for other programs, like food stamps and fuel assistance, but aren’t aware of their eligibility.
“There are a lot out there,” he said, “but they’re not all in one place.”
The most expansive financial education initiative in New Hampshire has been undertaken by the public schools at the prodding of the Jump$tart Coalition for Personal Financial Literacy, a nationwide nonprofit that seeks to prepare students “to explain the importance of money management, spending, credit, saving and investing in a free market economy.”
Since 2006, the New Hampshire Board of Education has required a half-credit of economics, “including personal finance,” among the 20 credits required for graduation. The curriculum mirrors the standards of the Jump$tart Coalition.
“It sounds good,” said Dan Hebert, president of the NH Jump$tart Coalition since it began in 2000, told the House Education Committee, “but the schools don’t necessarily teach what the curriculum framework or cookbook prescribes.” He added that “it always gets down to the money“ and “there are only so many hours in the day.”
In 2013, when Jump$tart first surveyed the 111 public high schools, only three — Bedford, Newfound and Hinsdale — met what Hebert called “the Holy Grail,” by requiring both economics and personal finance for graduation.
By 2019, that number had grown to 10, while another 35 schools met the economics requirement and offered a stand-alone course in personal finance as an elective. Another 16 met the economics requirement while offering personal finance instruction under various rubrics. Hebert said that economics and personal finance are often part of social studies programming and taught by teachers whose education and expertise lies elsewhere.
“Every school district differs,” said Caroline Masterson, who teaches business and personal finance at Merrimack High School. She said that while personal finance is not required, enrollment in her classes runs between 100 and 200 out of a total enrollment of about 1,100. As an elective, she said, personal finance competes with advanced placement courses for the limited time of students, especially those seeking admission to the most prestigious four-year colleges.
In 2009, shortly after the economics requirement took effect, the Rockefeller Center at Dartmouth College found that, although New Hampshire “consistently exceeds national financial indicators, students still fail to demonstrate financial literacy on survey instruments” and described the efficacy of personal finance programs as “mixed and inconclusive.”
By 2017, New Hampshire high schools were among those in 19 states to score a B from the Center for Financial Literacy at Champlain College, which grades high schools across the country on their efforts to turn out financially literate graduates. But in that survey, the formal curriculum requirement contributed significantly to the grade. Next Gen Personal Finance, a nonprofit corporation that partners with schools to promote and provide instruction on financial literacy, reported that in New Hampshire only 5% of students completed a semester of instruction in personal finance while 71% had access to the subject as an elective.
Compared to 2006, “the drumbeat for personal finance is a whole lot louder today than it was then,” said Hebert. “This is not controversial. It’s the community will. It’s up to the parents.”
He urged parents to refer to CheckYourSchool.org, which provides information about the financial education offered by particular schools.
On Feb. 19, the House Education Committee voted in favor of an unamended HB 1501, which would establish a commission to study financial literacy. The vote was 12-6, with all Democrats and one Republican voting in favor.
Griffith, the sponsor, said, “it was a pretty successful day” and expected the bill to carry the House. “The discussion will continue on the other side of the wall,” he said.