Statistics
Statistics of Financial Illiteracy
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Only 27% of parents surveyed in 2003 by Fleet Boston felt
well-informed about managing household finances.
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Fewer than half of those surveyed felt they are good role models for
their children regarding saving and spending.
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In 2004, the average credit card debt among 25 to 35-year-olds,
including parents, was $5,200 – nearly twice as many as in 1992.
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Over 60% of families create a continuous debt situation by paying
the minimum amount on their credit card bills.
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79% of high school students have never taken a course on personal
finance.
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82% failed a basic quiz evaluating their knowledge of financial
management.
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94% of students say their parents are their primary teachers on
financial matters.
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In 2001, 120,000 people under the age of 25 filed for bankruptcy.
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In the last 10 years, the total cost of sending students to public
colleges and universities, which the majority of students attend, is
up 63%. The cost of private colleges and universities has increased
by 47%.
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The average college student graduates with $27,600 of debt.
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Students are delaying marriage, having children, or buying a home,
and many are forced to move back in with their parents as a result
of unresolved financial issues.
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The average Pell Grant covers only 40% of college tuition compared
to 77% 25 years ago.
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The revision of financial aid, the increased rates will be used to
pay down the deficit, meaning the children will be paying for our
countries financial illiteracy.
Everything is fast; fast food, computers, email, text messaging,
video games, microwaves, fax machines – there is little delay for
anything. Remember when you waited to get a letter by mail? If you
needed to get in touch with friends, you walked to their house or
called them on the phone. Dinner actually took an hour.
While there are many benefits from today’s technology and
convenience, I feel our children have missed learning how to want
for things, earn things and overcome obstacles to get what they
want.
To top it all, many parents are providing lifestyles to their
children that they simply cannot afford. I had a chance to meet with
Milton Creagh author of Nobody Wants Your Child, and while we
covered many subjects in our conversation, the main subject was kids
and money. He travels all over the U.S. speaking to parents and
children about drug prevention, but what he notices most is how
spoiled most kids are. At most of the high schools where he speaks,
the kids are driving nicer cars than the teachers. Most of these
kids do not have jobs. Their parents are footing the bill for the
lifestyle the kids are enjoying and becoming accustomed to – for
free. We also discussed entitlement attitudes among children and how
this habit causes young people to find it difficult to get or keep a
job.
Parents who perpetuate this lifestyle for their children are going
to pay a huge price down the road when the kids leave home. The
boomerang effect – grown children moving back in with their parents
– has a lot to do with the inflated expectations children have about
their lives when they leave home. They can’t afford the lifestyle
their parents gave them at home, and they have no skills to create
it for themselves. What do they do? They turn to credit cards to
fund the only lifestyle they know.
Parents are spending way too much money on their kids and
unwittingly setting their children up for failure. Think back to
when you were a kid. Did you have chores? Were you more respectful?
If you were told to do something that you didn’t do, was there a
consequence? Chances are, you answered “yes” to those questions.
Parents become overly concerned with inheritance. But it’s not what
you leave to your children that matters most. It’s what you leave
inside them that counts most. Our job as parents is to teach our
children how to survive, be responsible, and make wise choices in
life.
There are three ways to attain wealth: Earn it, marry into it, or
inherit it. Which would you like to teach your child to do? And most
importantly, which way can your child carry on a legacy? If you have
worked all your life to build your financial security and do not
take the time to teach your child to do the same, all you have built
will crumble, be squandered away, and gone forever. In other words,
think also about your grandchildren and great grandchildren.
Alan Greenspan, Chairman of the Federal Reserve
Board, has recognized the lack of financial literacy among U.S.
teens and stated in April 2001 that:
"Improving basic financial education at the elementary
and secondary school level is essential to providing a foundation
for financial literacy that can help prevent younger people from
making poor financial decisions that can take years to overcome."
Greenspan agrees that teaching money basics at an
early age is critical to thwarting bad habits before our children
build a lifetime of excess personal debt. And, more importantly,
he says the secret to creating the next generation
of money smart, economically literate adults lies in early childhood
education. By giving our children basic economic literacy,
we empower them to take control over their financial lives and their
futures.
Read more…
 CBA
Survey-Leaders in Retail Banking
CBA 2002 Survey of Bank - Sponsored Financial Literacy Programs
For the second year, CBA has conducted a nationwide study examining
the scope of financial education programs provided by financial
institutions. This survey measures the industry's educational
efforts in mortgage/homeownership counseling, foreclosure prevention,
credit/debt management, predatory lending, small business development,
K-12 and college based programs.
Our efforts to document bank-sponsored financial literacy programs
have been prompted in part by the current national dialogue on
the state of financial literacy in the United States. In recent
years, a wealth of data has emerged documenting the lack of personal
finance skills among students and adults. A survey of high school
students conducted by Americans for Consumer Education and Competition
(ACEC) found that 82% of students tested failed a basic quiz evaluating
their knowledge of financial concepts such as interest rates,
savings, loans, credit cards and calculating basic net worth.
Reports of failing test scores among students, and the lack of
a basic understanding of economics and finance among consumers
in general, have sparked a notional dialogue on how to adequately
address financial illiteracy in America.
Read more…
Youth & Money 1999 Survey sponsored by the American Savings
Educational Council (ASEC), the Employee Benefit Research Institute
Many of today's students are making money and saving money.
However, only 21 percent of students between ages of 16 and 22
have taken a personal finance course through school, and two thirds
admit that they should know more about money management. In general,
students give self- appraisals of their financial knowledge and
money management skills. While these self-reports are verified
by some behavior, they are called into question by other reported
attitudes and behavior. Sixty-five percent of those who have had
access to a personal finance course in school have not taken it
advantage of it despite the fact that most students admit they
need to know more. Schools are an obvious and natural avenue to
reach young people with such information, but the importance of
parents should not be overlooked or underestimated. By far, the
most-often cited source for financial information among students
was their parents.
Read more…
 Jump$tart
Coalition
The national standards in Personal Finance identify what K-12
students should know and be able to do in personal finance. The
National Jump$tart Coalition for Personal Financial Literacy asserts
that all young people graduating from the nation's high schools
should have sufficient knowledge and skill to enable each student
to take individual responsibility for personal economic well-being.
Read more…
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