Making the Case for Financial Literacy
The Maine Council on Economic Education recently released this compilation of statistics on financial literacy in our country:
Personal Financial Literacy Education Only 21 percent of students between the ages of 16 and 22 say they have taken a personal finance course through school. (Youth and Money Survey, ASEC, 1999 and 2001.)
Only 26 percent of 13 to 21 year olds reported their parents actively taught them how to manage money. (Ibid.)
Only 7 percent of parents say their child understands financial matters well. (Ibid.)
Ninety-four percent of students ages 16-22 say they are likely to turn to their parents as a financial information source. (Ibid.)
Thirty percent of youth report that their parents rarely or never discuss saving and investing with them.
Forty-seven percent say their parents rarely or never discuss household budgeting with them. (Ibid.)
Sixty-one percent of parents say that parents and schools should share the responsibility for teaching children about financial education. (Ibid.)
Research has shown that as little as 10 hours of personal financial education positively affects students spending and savings habits. (NEFE, 1998.)
A Consumer Reports survey of 12-year-olds found that 28 percent didn’t know that credit cards are a form of borrowing, 40 percent didn't know that banks charge interest on loans, 34 percent didn’t know that you can’t tell how good a product is by how much it’s advertised.
Average expenditures: $104/ week; $5,408/year. (Teenage Research Unlimited, 2001.)
Teens surveyed by Teenage Research Unlimited reported spending 98 percent of their money, rather than saving it.
More than 1 in 5 youths ages 12 to 19 have their own credit cards or have access to parents’ credit cards, and 14 percent have debit cards. (Ibid.)
Forty percent of students are likely to buy a pair of jeans (or something similar) they really want even if they do not have the money to pay for it. Twenty-two percent would pay for it with a credit card. (Youth and Money Survey, 1999 and 2001.)
One in three carry credit cards; even more have an ATM card. (Louisiana State University Agricultural Center.)
Fifty percent of high school graduates do not go to college and enter the workplace directly. (Fort Worth Business Press, 2002.)
American Families Outstanding non-secured consumer debt rose from $845 billion in 1990 to $1.65 trillion in 2001. (FRB, 2003)
The personal savings rate as a percentage of GDP decreased from 7.5 percent in the early 1980s to 2.4 percent in 2002. During World War II, Americans were saving more than 24 percent. (BEA, 2003.)
The U.S. has the lowest personal savings rate of any major industrialized nation. (ABA Education Foundation.)
The percentage of income used for household debt (payments, including mortgages, credit cards, and student loans) rose to the highest level in more than a decade in 2001 and remained at 14 percent in 2002. (FRB, 2003.)
Forty-eight percent of credit card owners only pay their minimum monthly payment each month. (VISA, 2002.)
More than half of American workers between the ages of 45 and 54 did not have any kind of retirement account in 1998. Data compiled in 2000 showed half of those in the 55 to 64 age range had balances of less than $33,000. (Lakeland Ledger, 2002.)
Life expectancy in the U.S. recently reached a record high, with an average lifespan of 74.1 years for men and 79.5 years for women. (US Department, HHS, 2002.)
College Students Persons entering college are offered an average of 8 credit cards the first week of school.
Fifty-five percent of college students acquire their first credit card during their first year of college, and 83 percent of college students have at least one credit card. (Senate Resolution 48, 2003.)
Forty-five percent of college students are in credit card debt, the average credit card debt being $3,066. (Ibid.)
Undergraduate students carry an average of three credit cards. (Nellie Mae, 2002.)
Graduating students have an average of $20,402 in combined education loan and credit card balances. (Ibid.)
Twenty percent of graduating college students have $10,000 or more in non-school related credit card debt. (Milwaukee Journal Sentinel, 2003.)
Twenty-eight percent of students with a credit card roll over debt each month. (Nellie Mae, 2000.)
Only fifty-nine percent of college graduates agree that the benefits of incurring student loans are worth it overall. (Ibid.)
Students double their average credit card debt and triple the number of credit cards in their wallets from the time they arrive on campus until graduation. (Ibid.)
Bankruptcies, Defaults and Foreclosures
The US has recently seen an over 50 percent increase in bankruptcies among people under age 25 (fastest growing age range for bankruptcies). Bankruptcy filings for this age group were at an all time high in 2000, numbering almost 150,000, which is a tenfold increase in just five years. (Louisiana State University Agricultural Center.)
Non-business bankruptcy filings increased again in 2002 totaling 1,539,111. (American Bankruptcy Institute, 2003.)
Non-business bankruptcy filings accounted for the overwhelming majority (97.6 percent) of all bankruptcy cases filed in calendar year 2002. (Ibid.)
Home foreclosures in 2002 reached the highest rate in 30 years. (Senate Resolution 48, 2003.)
More young adults filed for bankruptcy than graduated from college in 2001. (ABA Education Foundation.)
The Maine Council on Economic Education is a long-time leader in promoting financial literacy in Maine, bringing hands-on economics programs into classrooms and giving teachers the tools to make financial education meaningful.
Programs such as The $1 million Challenge in which teams of students are “given” a million dollars to try their hand investing in stocks and mutual funds, and Economics Challenge, a “College Bowl” type of competition for high school students, are typical of the real-life tools that the council makes available to schools across the state. In most cases, area businesses work with the council to cover the cost of curriculum materials for their schools and to bring business people into the classroom as guest lecturers.
For more information, visit the Maine Council on Economic Education Web site at www.mainecouncil.org.