Accrued interest. Credit score. Bond. Tax Credits. Bankruptcy.

 

                For most of us these are words that we have heard before that we might or might not know the correct meanings of. Chances are if you have ever had a credit card, mortgage, lease or any kind of loan you have a working knowledge of what these terms are though.

                These terms are referred to as ‘financial literacy’ and just like with any other type of terminology the knowledge is power. You see the financial literacy among youth is declining according to a national survey from this year. According to a nationwide survey conducted by the Federal Reserve in 2006, teens could correctly answer 52% of questions about financial basics. This year, the figure dropped to about 48%.

 

                Why is this a problem? Well it’s a problem because according to South Dakota college officials, they say they're seeing students who have almost no concept of financial management, and that is not a good thing. College is a time where students accrue the most debt because of things like student loans and the general cost of their schooling, so if they aren’t properly educated about things like credit cards and interest rates and loans then chances are they will end up in more debt then they needed to be in in the first place.

 

                South Dakota school officials have found a way to try and help combat this problem though. Starting in two years, South Dakota high school students will need at least one completed course in financial literacy in order to get their diplomas. What this means is that they will have at least one semester of some sort of financial literacy class under their belts before stepping out into the real world to face the harsh realities of debt.

 

                South Dakota officials are not the only ones concerned about the growing problem. Both presidential candidates Senator John McCain and Senator Barack Obama are trying to find ways to help. While neither one have outlined plans to target this specific problem both do have plans to help lower the costs of higher education and plans to hold credit card companies and student loan companies more accountable for things such as interest rates and hidden costs and things. If you would like to read about either one of these candidates plans you can visit their websites at:

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                Now while the South Dakota Board of Education understands that this isn’t a cure-all for the problem they hope that with some real life education students will be more prepared to step out into the real world and face the challenges that lie before them. They know that in the end, knowledge is power.