Raise your hand if you remember that time the Kardashian sisters got sued for racking up $120,000 in charges on their employer’s credit card. No?
Well, for the high school students participating in the Chicago chapter of the financial-literacy program MoneyThink, the celebrity snafu serves as a teachable moment. In a seminar called The Good, the Bad and the Ugly of Plastic Money, a MoneyThink mentor uses the reality stars’ mishap to help teens understand how important it is to create a budget, especially to keep from spending money they don’t have.
The lesson seems fairly obvious: If you don’t want to end up in a financial hole, you should know how much money you’re earning, and not spend more than that. But “there’s a difference between knowing something and doing something,” notes Sarah Gordon, vice president of nonprofit investments at the Center for Financial Services Innovation (CFSI) in Chicago, MoneyThink’s biggest funder. Gordon also sits on MoneyThink’s board. “I know I shouldn’t eat bacon cheeseburgers, but sometimes I do. I shouldn’t speed when I drive my car, but sometimes I do.”
The goal of MoneyThink is to close the knowing-versus-doing gap, and to teach young people, especially those who come from low-income backgrounds, a more sophisticated way to think about money. By all accounts, they need the help: According to a national report from the Financial Industry Regulatory Authority (FINRA), millennials aged 18 to 34 have significantly lower financial literacy than older cohorts. When asked five standard questions about personal finance, FINRA found in 2012 that millennials answered 2.3 questions correctly, compared with 3.3 of those 55 or older. A 2009 report from the National Endowment for Financial Education found that in a survey of about 2,000 college students, 73 percent had engaged in “risky financial behaviors,” like taking on additional debt after graduating from college when they were already sandbagged with hefty student loans.
“Every headline for the past five years has been talking about how broke our generation is, how the income gap and the wealth gap continue to grow, and how low- and middle-income Americans are becoming more and more marginalized,” says Ted Gonder, 23, a co-founder and executive director of MoneyThink.
The nonprofit, born in 2007, started as a mentorship program at the University of Chicago, whose home city has one of the highest rates of extreme poverty in the nation. Gonder and four of his fellow students started mentoring poor kids in the neighborhood, with the goal of increasing financial literacy. The program gained traction quickly, and before long the founders were at the helm of a nationwide student movement. There are now 30 MoneyThink chapters on college campuses in low-income areas in 10 states, including the University of Southern California in Los Angeles, Columbia University in New York City and Washington University in St. Louis. In 2012, President Obama recognized MoneyThink as a “champion of change,” and in October the program won $100,000 in funding through MassChallenge, the country’s largest business accelerator.
Gonder buzzes with ambition and energy, his mop of brown hair never perfectly in place. In a sea of Gen Y’ers with a vision, his relentlessness stands out. “We’re on a hunt for the holy grail of youth financial-education effectiveness, and we won’t stop until every student in America enters adulthood with the knowledge, skills and tools to navigate real-life financial decisions on the pathway to prosperity,” he says.
MoneyThink is a modern-era money-management program; its curriculum goes beyond teaching students how to balance a monthly budget or checkbook (though they do that, too). The nonprofit focuses on value creation through entrepreneurship and personal branding. In program units titled Marketing Yourself, Networking, Jobs and Entrepreneurship, students create a resume and fill in a worksheet that helps them articulate their character assets and what skills they personally bring to the table. MoneyThink also strives to instill in students the confidence that they have the skills they need to succeed — confidence itself being a real asset in a marketplace that values self-promotion.
“What it takes to get and keep and create a job in the 21st century is vastly different than it was 100 years ago, 50 years ago or even 20 years ago,” says Gonder. “Even if you work for a big company or government, your job is not secure, and pensions are a thing of the past. Self-reliance has to be at the front of mind and the front of action.”
MoneyThink mentors, who are all college-age volunteers, make good use of current events, pop-culture case studies and technology (stay tuned for a MoneyThink smartphone app coming soon) to engage their 11th- and 12th-grade pupils. Classes are structured in a small group setting, with a 5-to-1 student-to-mentor ratio, where mentors can get to know students personally, and customize their lessons. The program lasts 21 weeks, allowing relationships of trust to form between the college and high school students. The fact that they’ve made it to their junior and senior years of high school in itself demonstrates that they have what it takes to succeed, explains Gonder.
“I have a goal each day,” says Nnaji Iwunza, 19, a MoneyThink graduate from Chicago who, after being accepted to 21 universities, many on full scholarship, is currently attending Baldwin Wallace University and studying marketing. “I set myself a spending limit, and have goals for savings.”
Nnaji, who is also a forward for the university basketball team, says that most people refer to him as “Nnaji, the basketball player,” and requests of this reporter, “Can you please put ‘Nnaji, the student?’ ”
MoneyThink tallies between $300,000 and $500,000 in funding each year from CFSI and other firms, including Blackstone, Pimco, State Farm and Chase. The nonprofit has plans to become self-sustaining by creating a membership base of alumni who would pay for access to an internal professional leadership network, job board, events and the like. Gonder is also hoping to make the mobile app profitable, though he’s still trying to figure out how. He has ambitious goals to scale up in the meantime, aiming to establish MoneyThink chapters in every city in the United States by 2019.
CFSI’s Gordon thinks the program has potential to grow while keeping costs low. Financial coaching is expensive, but MoneyThink is driven by a volunteer movement of young people teaching other young people. That’s an infinite and renewable resource.