August 13,  2002
Financial Outlook
     When I graduated  from high school and prepared to go on to college, I did not realize at that  time how little I really knew about taking care of my financial future.   When I was a sophomore in high school I  had taken home economics where we learned, among other things, how to balance a  checkbook and how to read the stock pages in the newspaper.   Although that was in 1983 - 1984, I am  sure that there is more that we could have been taught like: budgeting, how much of your income  should go to housing, how much debt is manageable, how to manage revolving  credit and how much it really costs to live on your own. Once I was on my own, in college, I came  to the realization that I had no clue about finances.
     When my mom dropped me off at Eastern Washington  University I was in a world that was very unlike the world I grew up in.   In my wallet was only the money from my  last paycheck.  I had not realized  that when you apply for financial aid and you do not hear back from the college,  that means that you did something wrong on your application.   I found out very quickly that my money,  which was approximately $240.00, was going to have to buy my books for the first  quarter as well as my spending money until my financial aid application was  finally processed, which took two months to complete.
      The idea of not having any spending money was not a  new concept to me.  I had grown up  in a household where there was no allowance and any clothes that I needed I had  bought for myself since I had started babysitting when I was twelve. When I had gotten my first "real" job it  paid $3.35/hour, which was the minimum wage at that time.  This meant that there were no concerts,  very few movies at the theatre and when I went to go see my favorite sports  team, Seattle Mariners, I could only sit in the cheap seats out in left field of  the Kingdome.   I quickly learned  that there was not going to be anyone helping me to make sure that my finances  were in order.    I was on my own to  learn about managing my own finances.
I realized how important creating a budget was when  I got my first job that paid a decent wage.  I did not understand that the goal to  budgeting was not just having money left when it was time for the next paycheck  to be received. I pickup the first  book I ever read on financial planning, The Financial Guide For The Single  Parent by Larry Burkett.  It was  writing specifically for single parents, which I found to be amazing because I  had look at other books by a lot of different authors, but they wrote about  finances for a married or co-habituating couple.  One idea that still is imbedded in my  mind from reading Burkett's book is the real process of budgeting is to create a  spending limit for each category, i.e. groceries, clothes, auto, insurance,  entertainment and debt, once that spending limit has been met, do not borrow  from another category in order to spend more money.   I first used this idea by dividing my  money up and putting the allotted amounts into envelopes.  This created an easy way to keep track  of how much money I had left to spend in any category.   Although this concept is hard to  implement, I found that when I did follow it I would have extra money left at  the end of the month.
  As my  adult life progressed I made some decisions that adversely affected my credit  rating.  If I had known then what I  know now, I am pretty certain that I would not have made the same mistakes. I  think that it is imperative that everyone should receive financial planning  education during their school years, because most parents do not prove good  examples for the young students today.   It would be better if financial education started at home when each child  is very young, but as Rebecca Gardyn states, children would be better to find a  financial mentor that is not their parent (Gardyn).  With statistics where Americans having  one credit card with a balance of ?$2,985 in 1990? and that balance grew to  ?$7,942 in 2000? (qtd.in Greenspan 41), this growth shows that American adults  have not learned how to live on their income, but they have chosen to live on  credit instead.  Which provides a  prime example for parents not being the prime example for the youth of today to  follow.
Foggy  Skies for High School
    I would love to see my son get financial planning  education in high school that would give him the tools not to make the same  mistakes that I did, but I am not going to wait and see if he does get the  education that I believe that all high school students should receive. One of the main problems with education  in high school is that the government has created a required curriculum that  students are need to take, that the thought of adding one more class to the  schedule can be seen as overloading the students with requirements.  I think that teaching children to handle  money in a responsible manner should have started when the children were very  young and it should be taught by the parents, but sometimes schools have a  responsibility to teach all children what they are not getting taught in the  home.   All school systems teach  every student, starting in the fifth grade, about health and sex education, why  is it that they do not see that financial education is just as  important?
     One major problem with the school systems that do  offer financial education, as a part of their curriculum, is trying to figure  out which class it is taught in.  Jean Sherman Chatzky, who became involved in a program that was created  to get children ready to start learning when they enter school, called  JumpStart.  When she went to a  "training session for high school teachers" she realized that financial  education does not have a home, it can be taught in either "consumer economics  (what's replaced home ec.), economics or social studies or in math"  (Chatzky).  This idea of not  creating a class that readily identifies itself as a financial education class  creates problems for students who are interested in getting this important  education.  I know that I would have  never gotten the financial education that I did in high school if I had not  taken home economics, but with such a huge stigma attached that class, I wonder  if there were any boys who found a place to learn about finances in my high  school.  Even today, when looking at  the different classes that Chatzky found financial education was being taught  in, not all students are given this valuable education.
     When a class does  cover financial education, the lack of curriculum, which covers all aspects of  financial planning, is evident by a national survey conducted in 1997 in  Minnesota of graduating seniors.   The average respondents answered fifty-seven percent correct, in any  classroom this would be a failing grade (Int'l Trade).  The Federal Reserve Bank of Chicago has  created a financial education program, MoneySmart (Federal Reserve).  They have a great website that would be  helpful and useful to not only teachers when creating their own school lessons,  but also to the student themselves.   This website includes a test on knowledge, which students could use to  preview the information on the site, in order to realize which sections of  financial planning they need to spend more time learning about.  With the majority of schools in the  United States having access to the internet, there should be no reason for  teachers and students not being able to access this website. This website could be a great jumping  off point for teachers to create curriculum for any financial education  class.
    I have learned when researching what educational  requirements, or lack of requirements, exist in the United States, that Oregon  is one of thirteen states that does require "financial curriculum" in its school  system (Rodgers 6).  I found that to  be very promising, but when I went to the Oregon Department of Education  website, I had to search for quite some time before I came across any mention of  financial education; it ended up being a link where a teacher could find an  interactive program to include in their curriculum.   I hope that the requirement for Oregon  students is more than just using this interactive program, but I was not able to  receive confirmation or additional information in time to include it in this  paper.
    When students are sent out into the adult world with  out the knowledge to handle their financial future, they are left to being  preyed upon by the vultures; which will gladly take advantage of the  unknowledgeable.  While making  mistakes with money does not necessarily create a situation that can be life or  death, the ramifications can be long lasting.  One of the scariest statistics is that  bankruptcy filings are dramatically on the increase for adults ages 20-24, in  fact this is the "fastest growing group" (qtd. in Greenspan).  The American society has created a huge  stigma against people openly talking about their financial status to the point  that when someone finds themselves in over their head they are more likely to  keep silent about their problem rather than ask for help; this will only lead to  greater problems in the future for those in need of help and  advice.
Will  the Skies clear up in College?
    In the survey that I did, the majority of responders  said that high school and college students would benefit from financial planning  education.  When the next question  asked if they would be interested in taking a college class, the majority  responded yes, but I found it interesting how one person wrote that it should  not be required except for business students.  If I had interviewed this person, who  had responded with that answer, I would have loved to follow up with the  question of "How come you think that it should be required by business students  but not by the whole college population?" I find it alarming that someone does not realize the harm that can be  caused by someone not knowing how to manage his or her own money.  Maybe after they were given a chance to  read my paper and understand how tragedy can fall on people because they did not  have the education to face a financial problem head on, only to take the wrong  step and go further down the wrong path.   Then they are left struggling for years once their mistakes catch up with  them.  Everyone has to figure out  some method of how they are going to spend or use their money; unfortunately,  most people have not received the proper education to make their decisions  without knowing the long-term consequences.
   I have lived in apartments for a long time now; some  of my neighbors have been young adults who are on their own for the first time  in their life.  Most of my young  neighbors have lived with a roommate, but they still are not aware of how much  it costs to live on their own.  For  the most part, they have jobs that pay minimum wage, or just above.  Things will go just fine until one of  the roommates moves out without a replacement being found.  The remaining young adult is not only  saddled with the whole lease payment, and a lease agreement that will last for  several more months, but with any financial hardships that may follow.  I have seen where the remaining young  adult has skipped out on the apartment, almost overnight.  Although this action leaves them feeling  free of this responsibility, they did not have the knowledge that breaking a  lease can be a financial nightmare on their young lives.  Their former landlord will in all  probability sue them for the balance of the rent for the time remaining on the  lease as well as any other putative costs associated with breaking a  lease.
    When a graduate of high school goes off into the  adult world, whether they go to college or they go straight into the work force,  they should be educated with the knowledge of how to make the right financial  decisions.  College students are  especially vulnerable, and Portland Community College (PCC) participates in this  ritual every quarter.  Students are  inundated with credit card offers; PCC takes an active role in this ritual by  putting a credit card application in every bag when they sell textbooks.  Does PCC and other colleges, which take  an active role in promoting credit usage, have a responsibility to provide  financial education, so their students can make an educated decision?  I see the answer to this question as a  definite, resounding, yes.  "Getting  credit is easy, and not necessarily bad.   Managing it is the hard part" (Dowers). With PCC taking it upon themselves to  hand out the credit card applications, they should also hand out literature on  where their students can get help when they later find out that credit cards and  debt is an expensive way to live or solve financial problems in the short  term.
    Portland Community College and the majority of other  colleges do offer seminars on how to handle debt, but these are offered as a  requirement for students who are receiving financial aid and student loans.  The whole student body would be served  better if there was a course on financial planning.  I know that I would be one of the first  to register if it was offered at PCC and with the results of my survey, which  included seventeen of my fellow students and seventeen of my friends and  co-workers.  The number of  responders that would be interested in taking a financial planning course, from  a college, surprised me.  (See Chart  1)  While the results were close to  being even, the yes answers were in the majority; some of the no answerers did  say that if the classes had been offered earlier in their life then they would  have been interested.
     Financial planning  involves more than just balancing a checkbook, especially today when so many  employers offer 401k as an employee benefit.  Not only are employees confused as to  the mechanics of this benefit, but also when people do not understand how best  to manage their own money then they often panic when they see situations like we  are living today, where the stock market keeps going down further and  further.  They will be more likely  to panic and pull their money out of the market.  They do not have the knowledge that the  stock market has cycles, sometimes it is rising in value and sometimes it is  falling in value.  With a  diversified portfolio, consistent investing and time to allow their investments  to recoup their losses, there is no need for panic at the staggering losses that  are seen in today's market.  They  also need to learn that making level, continual investments can make even better  investments when the market recovers; all they need to do is ride the waves of  the stock market, which historically always rises from the perceived ashes.  Unfortunately, most employees do not  have the historical knowledge to realize that the stock market goes in  cycles.  "Because employer-provided  pensions represent an important source of income during retirement, accurate  information on pension coverage would seem to be crucial for making sound  decisions on retirement timing, saving and portfolio allocation"  (Starr-McCluer). There are up and downs swings through out the history of the  market, although the stock market is in decline right now there will time when  the stock market will rebound to regain any declines as long as the investments  are allowed to sit.
    There are currently some examples of the worst way  to invest your retirement funds being reported on television and in the  newspapers.  In the last few months  there have been several different stories about people who have lost most, if  not all, of their retirement money because they have invested too much into one  company.  Although I do not fault  those that have been caught in this huge mistake, others need to learn from  these mistakes in order to not make the same mistakes themselves.  This is a good example where seeking the  advice of a good educated financial planner would be very helpful. The earlier the  better.
Patches  of Blue are Spotted
    Searching for an educational program that would  offer me the training to prepare to help others amazed and surprised me, or  should I say the lack of education programs.  I looked at the programs that are  offered at the Portland State University, University of Oregon, and Oregon State  University and all I found was programs that are designed for those who want  accounting degrees.  There are no  programs to educate someone on how to help others with financial planning on a  personal level.  Since I am involved  in business finances, in the job that I currently have, I know that there is a  definite difference in the needs between the finances of business and the  finances of people.
    The amount of knowledge that I learned in the past  few years, mostly from reading books, watching television programs and listening  to the radio is no where near the amount of knowledge that a professional  financial planner needs to gain before they offer their services to the  public.  When I decided to go back  to college, for the first year, I just wanted to earn a piece of paper that  would tell others that I am knowledgeable; I had no idea what I would want to do  with any educational advancement.  I  have found employment where I am happy, not only because I receive a comparable  salary and benefits but also because of the family atmosphere created by the  owners of the company.  After doing  a lot of thinking and consulting with a counselor at PCC, I decided that what I  really wanted to do with my education was to offer financial planning for people  who can not always afford it, but are in definite need.
    With more and more people getting involved in  investments and planning, not only for their future but also the future of their  children, there is a need to educate those who are helping others with  planning.  There are colleges and  universities that do offer programs and degrees in financial planning.  "At the end of June, 1999, ninety-nine  American Colleges and universities offered Certified Financial Planning  programs approximately half  [lead] to undergraduate or graduate degrees"  (Eyssell 294)  The lack of  education programs available nation wide is something that I hope will change in  the near future because this country could use a reliable and trustworthy  personal financial planning community.
    In today's market, anyone may advertise that they  are financial planners even though they are for the most part insurance, stock  and bond salespeople.  One program  that has been in place to educate those seeking financial planning careers since  1972 is the College for Financial Planning in Greenwood Village, Colorado, they  offer certificate in several different planning specialties or a comprehensive  Certified Financial Planner program (College for Financial Planning).  The College for Financial Planning does  offer all of their courses as a distance learning course, which will be a nice  convenience for my educational goals, but I can see a need for more programs  being offered by other educational institutions.
    Financial planners should be knowledgeable in how to  not only build relationships with their clients but also learning how to access  the needs of their clients through developing long-term relationships.  This should be taught to those who are  starting the learning process of financial planning education as well as those  who are already giving financial planning advice (Eyssell 294).   With the news today talking about  failures of not only companies and accounting firms, but also the lack of  financial analysts who do not have any connections to the companies that they  are recommending to their listeners.   The need to restore the American investors confidence in planning  strategies for the future is at what I see to be highest need in recent  history.  Enlarging and publicizing  the programs and any acronyms that the public should look for when investigating  financial planning professionals could achieve this.
Sunny Skies Are On The  Horizon
    Let's face it, no  one can know how to handle every financial situation that comes up in their  life, and I do not expect them to.   For those situations that a person is not comfortable handling, they  should seek the knowledge of someone who has been educated to handle any  financial situation.  Some would say  that it is advisable to seek help from a financial adviser "as soon as you get  between $150,000 and $250,000 of investable assets" (Stern 67).  Where does a person find a financial  planner that is right for you, with over 600,000 advisers nationwide (Stern 67)?  They can look in the yellow pages, but does someone who advertises himself or  herself as being a financial planner actually put the clients need before their  own need to try and sell them a service or security?  The majority of people who call  themselves financial planners are actually insurance or stocks and bonds  salespeople.  They have little or no  education other than the classes that are required for them to pass to obtain  their Security and Exchange Commission (SEC) license.
    They have not  learned how to access a person?s needs and priorities. hey have little interest in their  clients overall financial picture because they do not take the time to get to  know them.  Those who have graduated  from the CFP program have been schooled in a six step "Financial Planning  Process"
(1)     Establishing Client-Planner  Relationships
(2)    Gathering Client Data and Determining Goals and  Expectations
(3)    Assessing Client's Financial  Status
(4)   Developing and Presenting the Financial  Plan
(5)   Implementing the Financial  Plan
(6)   Monitoring the Financial Plan (Eyssell  295)
Any financial planner who puts their clients needs  first, will either interview their clients or have their clients answer an  involved questionnaire to ascertain the clients? goals and expectations.
    When you are looking for professional help there is  one nationally recognized program that does education people to look at their  clients whole situation, needs, priorities and wants. Graduates of this program will have CFP  (Certified Financial Planner) after their name (College for Financial  Planning).  This program is similar  to CPA (Certified Public Accountant) in that the person is not only required to  achieve an education beyond a bachelor's degree, but they also have to have  verified work experience.  Only  those who have graduated and maintain good standing can use CFP on their  letterhead or after their name.
    Even after you find  a CFP you need to interview them to make sure that they have successfully helped  other clients that have financial situations similar to yours.  When you are looking for a planner, you  will want to get several different references.  You should realize that most references  will give the practioner glowing reviews and you should also check with the  Certified Financial Planner Board of Standards.  They collect and oversee any complaints  regarding CFP.  Find out if they  receive a large percentage of their compensation from commission for the  products that they might recommend to you. Check with the state Attorney General  and the Better Business Bureau as additional sources for customer complaints  (Facts for Consumers).  After  gathering all this information and asked any questions of the professional you  should be confident in your ability to receive competent counseling. All  professional financial advisors will be compensated for their expertise, the way  that they seek this compensation can vary from earning commissions through  buying and selling of stocks and bonds to a per transaction fee or a flat rate  when you are just looking their professional opinion.  Some professionals will combine any or  all of these to produce income for themselves or company (Bigel 225).  It is important to chose a professional  who generates their own income in a manner that you are comfortable  with.
I Can See Clearly  Now
    Now I am thirty-four years old and although I have  read some books on personal finances, listen to Clark Howard on the Radio, watch  Suze Orman's television show, I realize that there is financial planning  education that I should have learned earlier in my life.  I know that no one can know everything  about planning their future from the point that they become an adult until they  retire, but knowledge that will help young adults start their lives off on the  right path should be taught in high school.  When adults begin their first job that  offers a comprehensive benefits package which includes retirement funds is past  the optimal time for this education to begin, which is what happened to me.
    The knowledge that is available for those who seek  to gain that knowledge in order to educate themselves is comprehensive, but not  always appropriate for each individual situation.  That is why the United States needs to  invest more in not only educating the youth of today, but also by creating  college classes that will teach, to those who are interested, how to manage  their own finances.  The United  States should create more college degree programs that will educate people who  decide to major in financial planning, after all, this will be the best tool to  making sure that the American public is getting the best financial advice for  their individual situation.  While  the CFP program does a good job of governing and overseeing their graduates, the  Securities Exchange Act of 1934 created the ability for self-regulatory  organizations (Bigel 224) and in today's financial climate it would make more  sense for either the federal government or each individual state to create a  regulatory oversight commission to replace all the different self-regulator  organization that exist today.
WORKS  CITED
Bigel, Kenneth S. "The Correlations of  Professionalization and Compensation Sources With the Ethical Development of  Personal Investment Planners". Financial Services Review.  1998. Volume 7 Pages 223- 236
Chatzky, Jean Sherman. "Teach Our Children Well".Money. June 2002, Volume 31,  Issue 7.
College for Financial Planning. http://www.fp.edu/. 2002. Accessed July 24,  2002
Dowers, Karen.   "Crash Course Don't let Overspending Wreck You".  Air Force Times.  March 3, 1997. Volume 57, Issue 31, p  F2.
Eyssell, Thomas H.  "Learning By Doing:  Offering A University Practicum In  Personal Financial Planning". Financial Services Review. 1998. Volume 8, pp  293-303.
Federal Reserve Bank of Chicago. "Project  Money$mart".   http://www.chicagofed.org/consumerinformation/projectmoneysmart/.  2002.  Accessed July 14,  2002.
Gardyn, Rebecca. "Do As I Say, Not As I Do". American Demographics. June 2001. Volume 23, Issue  6.
Gerke, Marie. "Financial Planning Survey".Portland Community College.2002
Greenspan, Alan. "Financial Literacy: A Tool For Economic  Progress". The  Futurist. July-August  2002. Volume 36, No. 4. Pages 37-41.
"Int'l Trade Association Promotes Finance Education  For Students". Hudson Valley  Business Journal. May 25, 1998. Volume 9, Issue 2, p 15.
Starr-McCluer, Martha and Annika Sund�n. "Workers' Knowledge of their Pension  Coverage: A Reevaluation". Federal  Reserve Board of Governors. January  1999.
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