Today's economic landscape demands unreasonable levels of financial literacy
Early summer is the time of year when high school graduates and college are handed their diplomas (and, for college graduates, their books, student loan repayment). They hear stirring words of the early speakers on the pursuit of their passions, take risks and make the world a better place.
I doubt many speakers dwelt (if any) on the benefits of financial literacy, however. Extolling the virtues of compound interest and calling on the graduates to embrace their future 401 (k) is hardly a way to give a creepy public.
Too bad.It's a safe bet that most graduates did not have much to learn about personal finance at school - high school or college. Survey research shows that many people do not understand the terms of their mortgage, let alone calculate the interest rate on their credit cards. About one in five workers do not participate in his company 401 (k) plan. And at the end of 2009, the average 401 (k) balance was approximately $ 58,000 - enough to pay $ 183 a month for 30 years (assuming a return of 3 percent).
"There is a lamentable lack of financial literacy in America," said Roger W. Ferguson Jr., CEO of TIAA-CREF, a May 25 savings and investment conferences in the Boston University School of Management.
However, financial education is more important than before. The traditional paternalism of the major institutions of society, from business to government to education, has collapsed. Employers insist that their workers to take more responsibility for their pension plans and financing (401 Think [k] s and 457s.) Colleges rely on parents and students to come up with tuition dollars more (529 plans Coverdell and a).The modern economy of credit comes with a hefty price tag, with the merchants of debt likely to promote the practice of borrowing while hiding the real cost of loans, especially in low-income neighborhoods (lenders payday and subprime).
Taken together, individuals need to learn more about money and finance, because they have more responsibility.
The pyramid scheme—which deprived thousands of blacks of economic wealth—did not come only in the form of housing and mortgages, but also by way of “payday loans”, “buy-here-pay-here” car lots, “rent-to-own” pawn shops, title loans on automobiles,