As some of us so called benefit professionals try to get people to plan for retirement, it appears we should be getting them to understand some basic financial concepts (like don’t spend what you don’t have) first. Financial literacy should be a top priority and yet many of the people cited below are the same folks that companies expect to figure out their 401(k), make prudent investment elections and then plan how to use the money for thirty years after they retire. Good luck with that. Oh, yeah, they are also supposed to make the best selection from a health insurance exchange too. I remember way back when I was in a high school bookkeeping class we were taught how to write checks, balance a checkbook, read a savings book (a what?) statement and figure interest and we did it all before someone came up with the idea of a calculator. Now a high school graduate can’t find Greece on a world map (ok, bad example in blog about finances).
I suspect most politicians are in the D or F category because they sure don’t understand the federal budget or deficit problems.
MORE THAN ONE-THIRD OF AMERICANS GIVE THEMSELVES LOW GRADES ON THEIR UNDERSTANDING OF
Silver Spring, MD – According to the National Foundation for Credit Counseling’s (NFCC) annual Consumer Financial Literacy Survey, many Americans need to put themselves into “time-out.”When we were in school, a grade of C, D or F would have meant big trouble for us at home, often resulting in our parents putting us into “time-out.” The NFCC survey allowed consumers to grade themselves on their knowledge of personal finance, and 34 percent, or more than 77 million people, gave themselves a grade of C, D or F, suggesting that many adults would be well-served by a self-imposed “time-out” during which they could improve their grasp of financial literacy.
“Although the survey did show some improvements in consumer behavior as it relates to personal finance, there are still serious deficiencies which impact consumers’ ability to properly manage their money, particularly during an economic crisis,” said Gail Cunningham, spokesperson for the NFCC.
Consider that one-third of adults, or about 75 million people, do not put any part of their annual household income toward retirement. Although remaining level since 2009, this figure has increased by five percent since the 2008 survey, putting consumers in danger of being ill-prepared for retirement.
Of further concern is the finding that 30 percent of adults report that they have no savings. These people are on a very slippery slope when the inevitable emergency arises. Indeed, one in four say that if faced with an emergency, they would charge that expense to a credit card (25 percent) or take out a loan (29 percent), adding to their debt load with yet another bill to pay.
It is no surprise that millions of adults struggle to pay their bills each month, with 28 percent admitting to not paying bills on time. The ramifications include negative marks on the credit report and a lowered credit score, resulting in higher interest assessed on loans and credit cards, further exacerbating an already difficult financial situation. This is a very serious problem for two in five adults who report that their household carries credit card debt over from month-to-month, with more than 11 million indicating the amount of that debt to be $10,000.
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