Financial Answers "IN SIMPLE LANGUAGE"

 

 

I recently mentioned about my using information from surveys.  Well here I go again.  I could not pass this one up because it is what In Simple Language is all about… Financial Literacy.

 

What in the World is going on?

 

If you have not been a reader of In Simple Language-there can’t be very many of you left-over the past year, than you know I am constantly ranting and raving about the lack of financial literacy in the United States.

 

I have talked about teaching business classes, college level, in which most of my students did not have a basic understanding of financial services or understand the basics of how checking accounts, savings accounts, and certificates of deposit work.

 

Well hold onto your hat because it gets better…or should I say worse?

 

Recent Survey

 

A recent survey conducted between March 13 and March 16, 2009 by the NFCC (National Foundation for Credit Counseling) has recently released its findings.  I am not shocked or surprised by the findings.  What I am though is disappointed that financial literacy is still not being addressed in a way that is effective.

 

Forty one percent of adults in a test group of 1,000 phone participants said they would give themselves a grade of C, D, or F on their knowledge of personal finance.  That is almost half the respondents either failing or barely passing and admitting it.

 

The real scary part to this is that at least half of those people are people born in the 1980’s who are often referred to as “Gen Yers”.

 

Eighty percent of the respondents agreed that they would benefit from talking with a financial professional who could answer their questions and give them financial advice.

 

Here We Go Again

 

Is it going to talk a brick wall to fall on the heads of the people who run our public school systems to realize that they are turning out one class after another of functionally financial illiterates who can’t help themselves with even the basics of living in a capitalistic society?  What chance can these people possibly have?

 

These financial illiterates are the people who are a good portion of the future of our country yet we continue to look the other way.

 

Let’s look at some other statistics from this survey.  I’ll keep it short so I don’t bore anyone with numbers and percentages.

One of the questions asked was on budgeting.  It seems that less than half (42%) of the respondents don’t have a budget.  They don’t have any idea about what they spend or on what they spend.  Twenty-six percent, that’s one out of four, said they do not pay all their bills on time.  Fifteen percent admitted being late with credit card payments and close to ten percent hasn’t made a payment.

 

Six percent of this group had credit card debt of at least $10,000 that they were carrying over from month to month.  This same number has debts in collection and if they haven’t filed for bankruptcy in the past three years they are seriously considering bankruptcy as their only way out.

 

Thirty two percent of the total respondents said they have no savings.  Nearly half of the Gen Yers reported they had no savings.  They were relying on their credit cards for any emergency that may come along.

 

Do you think that maybe this is why you and I have to pay such high credit card interest rates and penalties when we screw up?  Do you think that if these adults truly understand what a devastating financial effect this has on their money that they would make some adjustments?  If they don’t understand what is going on nothing is going to change.

 

This vicious financial illiteracy cycle will continue on its merry way dragging all of us along with it in the form of higher costs.  I don’t believe that we can cure the problem of financial illiteracy 100%, but the number can surely be drastically improved.

 

If you would like to get into all the numbers and read the actual survey, please go to www.nfcc.org and look for the financial surveys section on the site.

 

 

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