Financial Literacy 2007 - Budgeting
A cartoon guy in red carrying a large piece of a coin and a blue background
smart spending
Poll: We set and follow budgets. Yeah, right.

Those of us with children in public schools know that the schools teach to the standardized tests. The best way to teach children the basics of financial literacy would be to add it to the standardized tests. Even without that incentive, many schools try to impart financial literacy, often in partnerships with nonprofits such as Junior Achievement.

Byford, the Oklahoma CPA and Certified Financial Planner who doesn't think the poll respondents were entirely truthful, says schools "absolutely" should teach the basics of personal finance, starting with budgeting. She was pleased recently when her middle school-aged son got such a lesson in math class.

Her son drew a career out of a hat -- a job as a nurse, making $54,000 a year. For his math assignment, he had to figure out how to get by without blowing his virtual budget. "He had to find a house that he could afford," Byford says. "He had to buy a car that he could afford. Also, he was married, with a wife that worked, and he had two kids. So he had to provide day care for those kids." He had to factor in the cost of utilities and other expenses. "It was a big math problem," Byford says.

After taxes and expenses, Byford's son had money leftover at the end of the month. "He said, 'Oh, I can get a pet!' A small dog was $10 a month and a large was $25. It was a great teaching tool about what things cost and the choices you have to make -- what you have to do without. I know it helped him see the choices that our family has made."

Byford is senior vice president of Stillwater National Bank in Oklahoma City and a registered principal for Raymond James Financial Services, as well as being chairwoman of the personal financial planning committee of the Oklahoma Society of CPAs. The organization sends members into classrooms to talk about budgeting, saving for retirement, the time value of money, the power of compound interest -- "very basic concepts of starting out early, and the earlier the better," Byford says.

Where to get budgeting help

As for adults who are perplexed about the basics of financial literacy, there are many resources in books and online. A groundbreaking book in the budgeting genre is "Your Money or Your Life," by Joe Dominguez and Vicki Robin, who describe how to account for every penny that comes in and goes out and how to keep spending under control.

Bernstein says, "These 'Dummies' books are quite good on this stuff" -- such as Eric Tyson's "Personal Finance for Dummies."

As for Web sites, the federal government has MyMoney.gov. Most discount investment brokers have personal finance tutorials. And keep your eye here on Bankrate.com, which will publish a guide to financial literacy each month, shining a light each time on a different corner of personal finance. To be notified of the new guides, sign up for an alert.

Who knows? Maybe someday a pollster will call and ask if you abide by a budget, and you'll say yes -- and be telling the truth.

The telephone poll was conducted for Bankrate by GfK Roper Public Affairs & Media among a national sample of 1,014 adults, Dec. 26-30. Results based on the entire sample have a sampling error of plus or minus 3 percentage points. Results based on subgroups have a larger sampling error.

What's your experience with budgeting? Are you struggling? Successful? Share your story.

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