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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