|
What is Financial Literacy? It’s no secret that personal finance mismanagement is a
growing problem. Savings rates are at an all-time low and
personal bankruptcy at an all-time high. Too many families
live paycheck-to-paycheck, or worse, they live beyond their
means, using high interest rate credit cards and payday
loans as supplemental income. It’s a terrifying but
reversible trend.
Here are a few statistics that will curl your hair:
- In the last 15 years, credit card debt has ballooned
from $250 billion to $800 billion.
- Half of US families carry a credit card balance and 35
million Americans pay only the minimum balance each month.
- Ten years ago, personal bankruptcy filings were less
than 800,000 per year. They are now running at an annual
rate of over 2 million.
- A Harris poll found that 46% of Americans plan to fund
their retirement solely through Social Security.
- The national savings rate is now below zero—lower than
at any time since the Great Depression. That means, as a
nation, we spend more than we earn.
- Only 50% of American households have a personal
retirement account and the median balance in those
accounts is $36,000. For individuals between the ages of
55 and 64, the median balance is only $88,000.
- Out of every 100 eighth graders in North Carolina,
only 58 will graduate from high school. The societal
implications of that statistic are immense. It also
indicates that the financial literacy problem will not get
better by itself.
We see a lack of financial literacy in the day-to-day
actions of our fellow citizens. Individuals in America:
- Spend more time planning a two-week vacation than they
do planning for retirement.
- Don’t know how they got into financial trouble, much
less how to get out.
- Don’t understand that the real cost of a car is not
determined by the amount of the monthly payment but by the
interest rate.
- Don’t follow a budget because they have no idea how to
even set one up.
- May want to save but don’t know how to start.
- After making minimum monthly payments for years, can’t
figure out why their credit card balance doesn’t budge.
- Think that Fair-Isaac is the nickname of a lenient
judge.
That’s where you come in. CPAs and other financial
professionals are in a unique position to improve the
overall financial health of our country, starting at the
grassroots level. By getting involved in the financial
literacy initiatives and offering financial education to
groups in your community, you accomplish several things:
- Your audience walks away with tools to help them
improve their financial footing.
- You increase your visibility in the community and
position yourself as a caring professional willing to
share your expertise to help others.
- You enhance the public’s awareness of the CPA
profession, re-confirm the CPA’s role as a leading
financial expert, and therefore promote your profession,
one group at a time.
If not you, who? If not now, when?
For more information, contact
lleonhardt@ncacpa.org.
|
