Left to right: Mary McCafferty, Melissa Falvey, and David S. Smith
Lessons learned, lessons shared:
Teaching financial skills to at-risk youth
Imagine not being able to balance your checkbook. Imagine not knowing what a mortgage is, or how credit cards work, or why budgeting is important. For that matter, imagine trying to get through life without a bank account.
For many Americans, ignorance of even the most
basic financial concepts is a fact of life. That’s
especially true for young people living in
disadvantaged urban areas, where jobs are scarce, incomes are low, and financial services are limited.
When David S. Smith, an availability analyst in Technology Operations, was growing up, he saw first-hand how financial illiteracy kept his friends and neighbors in a struggling Philadelphia neighborhood from succeeding. That’s why he’s determined to help young people from similar backgrounds learn to manage money and understand basic economic principles.
“Kids know that they want to make a lot of money, but in many cases, that’s all they know,” he said. “Making money is a good thing, of course, but you also have to know what to do with it—and what not to do. Too many young people define success as driving a Lexus and wearing expensive clothes. They don’t give any thought to setting aside money to educate their kids, buy a home, or save for retirement.”
Sharing skills, challenging assumptions
Recently, Mr. Smith and fellow Vanguard crew members Mary McCafferty, a line manager in the Client Relationship Group, and Melissa Falvey, a CRG client relationship administrator, created a nonprofit educational program designed to teach financial skills in disadvantaged communities. Called Winning Wealth Services, the project grew out of an assignment in an M.B.A. class they took together at Penn State Great Valley, a branch campus near Vanguard’s Malvern headquarters.
The colleagues developed a curriculum they call
BASIC—for Budgeting, Account Management, Saving, Investing, and Credit Management. They
worked with a Philadelphia-based social-service organization, Congreso de Latinos Unidos, to bring the class to an inner-city program for high school dropouts studying for their general equivalency diplomas.
“It’s exciting to be part of an initiative that
provides the opportunity to give back to the
community and hopefully effect long-term change,” said Ms. McCafferty.
It’s a small start, but the group hopes to expand
Winning Wealth in the Philadelphia region over
the next two to three years.
“The project has challenged a lot of my assumptions,” Ms. Falvey said. “Many of us at Vanguard are fortunate to have come from comfortable backgrounds, and we tend to assume that most people have similar experiences. It’s been an eye-opener to see how many young adults have little or no familiarity with financial concepts we take for granted.”
Mr. Smith, Ms. Falvey, and Ms. McCafferty are
careful to tell students that they do not speak for
Vanguard, nor do they recommend particular
investments or services. Their only purpose,Mr.
Smith emphasized, is to teach general principles of personal finance and investing—not to provide investment advice or promote Vanguard funds.
Thinking of the future along with the present
Mr. Smith noted that relatively few banks have
branches in poor urban neighborhoods. The lack
of easy availability dissuades many residents from opening bank accounts and leads them to rely on neighborhood check-cashing agencies. Such places often charge hefty fees for even routine transactions—dealing yet another financial blow to the disadvantaged.
“Some companies try to make money off of
people’s ignorance and helplessness,” Mr. Smith
said. “That’s one of the things we’re trying to overcome.”
That isn’t the only hurdle. Teaching young people to see what’s achievable in the years ahead is an uphill battle.
“I have opportunities today that didn’t seem possible when I was growing up,” Mr. Smith said. “That’s because I worked hard, finished my education, and took advantage of every chance that was given to me.We’re trying to show at-risk kids that if they educate themselves and think of the future along with the present, they can go far.”
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