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The economy of the United States is driven by financial services, including consumer credit, investment opportunities, insurance and real estate. With Americans spending more, saving less, failing to budget and plan for retirement, and relying increasingly on credit, it is critical to ensure they are prepared to manage their finances and property in a responsible manner.
April is Financial Literacy Month, designated to educate the public about the need for increase financial literacy for youth and adults in the United States. And that need is astounding. Surveys conducted by several national financial literacy organizations demonstrate a decrease in the number of young adults who have an understanding of the basic principles of personal finance. Because lifelong financial habits develop in childhood, ensuring that our nation’s youth learn how to manage money and use financial services properly is vital to their future prosperity.
The need for financial literacy, particularly among young people, has been supported by statistics. Studies show that approximately 92 percent of students acquire at least one credit card by their second year of college, yet only 26 percent of those between the ages of 13 and 21 reported that their parents actively taught them how to manage money. Financial illiteracy extends to adults as well. A Retirement Confidence Survey conducted in 2004 found that 37 percent of workers are not currently saving for retirement and an even higher percentage (42 percent) have not calculated how much they will need to save to finance their retirement.
Even use of common financial services such as simple banking has decreased. Studies show that as many as 10 million households in the United States are "unbanked" or do not have simple savings accounts. Americans also are spending more and saving less – a 2004 survey indicated that personal savings as a percentage of income declined from 7.5 percent in the 1980s to 1.1 percent in 2004.
For the United States to proper, Americans must dedicate themselves to becoming financially knowledgeable and to adopting sound financial plans. There are several resources, many free, available to help individuals plan for their financial present and future. These resources can be accessed through local libraries, the Internet, financial institutions, or professional financial planners. I encourage all Americans to educate themselves and others on the important of spending, investing and saving wisely. Our nation’s future depends on it.
** For tips on saving and other financial issues, please visit the Department of Labor’s website at www.dol.gov/ebsa/savingmatters.html. The Federal Trade Commission also offers good information on the use of consumer credit at www.ftc.gov/ftc/consumer.htm
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