Five questions for Mary Ann Hewitt, executive director of the Maryland Council on Economic Education

What would a third-grader need to know about finance?

The Maryland Council on Economic Education promotes financial literacy for students from kindergarten through 12th grade by developing lesson plans, computer games and materials, and teaching teachers how to use them in an array of classes.

The mission, as the nonprofit organization founded in 1953 puts it, is to see that Maryland students graduate from high school "with the knowledge and decision-making skills they will need to make informed, rational decisions as consumers, workers, citizens, savers, investors and participants in the global economy."

Mary Ann Hewitt has been the organization's executive director since 2005. She recently answered five questions from The Baltimore Sun.

For high school students, where are the major gaps in their knowledge of finance?

Probably three ways I'd answer that. No. 1, I don't know that they understand the economic decision-making model, and that is simply looking at the cost-benefit analysis. Or, on a much simpler platform, the pros and cons of a choice.

There is no free lunch. And if you do something, you give up the opportunity to do something else. So if you buy a house you may give up the opportunity to go on vacation. If you take out huge amounts of student loans, we're seeing a lot of data that says those kids are giving up the opportunity to buy houses right now. So, not sure that most kids understand that concept, that if you make one choice you give up something else. …

Another big deficit is their understanding of credit. They may know what a credit card is, but they do not have an understanding of how a lower credit score can affect their car insurance, renting an apartment, buying a house, or getting certain jobs that require higher credit scores. And you know in Maryland we talk a lot about STEM [Science, Technology, Engineering and Math] jobs. But if you have a low credit score it really doesn't matter what your degree is. Most companies have to have a high credit score. …

They don't understand saving and investing. They may understand the concept of saving $50 or whatever, but they don't understand the concept of investing at all.

Have those gaps changed much in 30 years?

I don't think they were the same 30 years ago, and this is why: Finances are much more complicated than they were 30 years ago. You could find a bank president who could get you facts that would tell you how you open an account 30 years ago compared to now, or 50 years ago compared to now. I remember the first time I took my oldest child to get a bank account, I said to myself, "This is a lot different than when I got a bank account," and I know a lot more about finances than most people. It was no longer "Put X number of dollars in. Make sure you don't overspend and get an overdraft." It was suddenly "You can use online banking and it will cost you this or that, or not this or that. You can use phone banking." I could go on and on. …

The conditions have changed, so I don't think the knowledge gap was as great then.

You have programs starting in kindergarten, but they intensify starting in third grade. What would a third-grader need to know about financial literacy, and why?

The thing we stress is the decision-making process. Even third-graders know they can buy a snack at lunch. They can take a snack from Mom's pantry, and they can save the money if they did that for something they might want bigger than a cookie from the cafeteria. Even a small child can learn 'If you choose this' [there is a consequence in something you may have to give up]. …

You can't start too young realizing that the choices you make [have consequences]. …You can't have everything all the time.

What do you know about the impact of your programs?

We do have some anecdotal stories that kids take this information home to parents. We've had teachers tell us that parents have come in here to have conferences and say, "We've changed our credit habits. We had way too many credit cards. And we're changing, we're talking about it as a family." …

You can look state by state at the bankruptcies. … We also can look at the rate of student loans. Are people borrowing more than they were? I don't know if that number has gone down in the last 10 years. … So bankruptcies, car repossessions, the amount of student loans, buying of houses in the age group of under 35 are some real indicators for us.

Two or three pieces of personal financial advice for adults or anyone else?

I would write down what I spend for a month, and then I would analyze it. Do I really want to eat lunch out every day? Do I really want to subscribe to magazines or buy books or whatever? Some of the richest people I know go to the library to read their books, they don't go spend 30 bucks at Barnes & Noble — they go borrow them. They rent their movies there. Another thing: I would learn as much about investing as I can. How to have your money make money. And I would live on less than what you make.

arthur.hirsch@baltsun.com

Mary Ann Hewitt

Title: Executive director, Maryland Council on Economic Education

Age: 67

Residence: Ellicott City

Education: Bachelor of Science in secondary education, University of Kentucky; master of arts in counseling, Western Michigan University

Birthplace: Kentucky

Family: Husband, Russell; daughter, Rebecca; son, Matthew; three grandchildren

Other interests: University of Kentucky basketball, antiques, Caribbean travel

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