Discussing the importance of learning about personal finances

April is Financial Literacy Month, so business correspondent Rhonda Schaffler sat down with Joe DiFiglia, the executive director of the New Jersey Council for Economic Education and the director of the Institute for Financial Literacy and Economic Education at NJCU.

Schaffler: It’s such an interesting topic, financial literacy. You know it quite well, but a lot of people in New Jersey and across the country are not really schooled on financial literacy. Why are we in this situation where people don’t know what they should about finances?

DiFiglia: It’s interesting. There’s no shortage of course of troubling statistics in financial literacy. I believe, though, that we’re actually past that inflection point — right past that crisis in financial education, and we’re on an uptrend. Right now listen there are certainly populations that are considered financially fragile still, and we have to definitely focus on that and that is one of our missions, but I believe that we are on a trajectory towards more financial education.

Schaffler: In New Jersey, we’ve made financial literacy education more of a priority than other states. How will that be a game-changer, do you think?

DiFiglia: Well, it certainly will be a game-changer. At the K-12 level we’re already seeing now survey results showing improved economic and financial behavior due to these mandates that we’ve instituted and implemented in the schools. So it is a game changer — we’re starting to see some survey results come out that financial behavior among those students that have had financial education in K-12 in New Jersey — it’s mostly in high school right now — starting to exhibit better behavior, higher FICO scores, more savings, more interest in putting money to work in their 401k and saving for retirement.

Schaffler: You know, it’s a big issue for people who do not really understand finances. Let’s take the case of students. A lot of students will go on to college; they’ll need to take student loans out, for instance. It can be a very confusing world to navigate if you just look at the disclosure forms you get before a loan. What are some of the points — the damaging points — that can happen to somebody if they don’t fully understand what’s happening?

DiFiglia: Well we’ve seen it. We see them getting into personal financial troubles. I think there are — this whole notion of “financial savvy,” right. I think what’s happened with that is that the gap between what we think we should know what we need to know has been increasing. We have we’ve seen more and more that financial responsibility is on the individual. We see it in investing for retirement, for example. We’ve moved from a defined benefits society to a defined contribution society. The defined benefits society, all we have to worry about then was taking money out of our paycheck and somebody else, our employer, would provide us with a pension for life. Now, it’s not only taking money out of our paychecks and putting it towards a pension plan, we have to have the intellectual capital to manage that money. We have to know what our goals are, what we value, how we plan on live our lives and how do we meet those goals — what kind of risk are we going to take. And suddenly this notion of “financial savvy,” is now becoming a bigger part of our way of thinking.

Schaffler: And it’s very tough, I mean, these are some hard topics that people have to digest. Tell me about the work of the institute. What are you doing now to further financial education?

DiFiglia: Yeah, this is exciting stuff we’re doing in New Jersey City University, at the school of business. I am the executive director of the New Jersey Council for Economic Education, and what we’ve been doing there is K-12 work, right. We’re doing professional development, providing classroom resources for teachers. We’re leveraging that expertise now at the university to expand and reach more people — families, adults. We’re working with a lot of the community nonprofits, faith-based institutions, workforce development programs. So, this is exciting, and we are ready to launch.

Schaffler: You mentioned that there are some more vulnerable populations in New Jersey, where financial literacy is very important. What are you seeing there?

DiFiglia: Well, a lot of times when we see these folks, they are already in crisis. And a lot of them — the real economically vulnerable, it’s a paycheck to paycheck, “How do we manage our budget,” right — a lot of them are earning close to minimum wage, and it’s this paycheck to paycheck. They’re getting caught up in and borrowing money; they don’t have ways to borrow money, if they do, they’re very expensive, you know, payday loan type of situations. But most of them it’s just managing the budget, to be honest with you.

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