FULL STEAM AHEAD -  by David Godsted

Americans’ understanding of how to manage money is poor.  The amount Americans owe on loans for homes, cars, credit cards and more adds up to nearly all of their annual income after taxes, up from 75 percent in 1992.

Twenty percent of U.S. families that earn less than $50,000 a year spend nearly half of their income to pay off debt.

In a recent national survey, teenagers said they spend 98 percent of their money instead of saving it. Of the 4,000 students who took the Jump$tart personal finance survey in 2002, 68.1 percent received failing scores.

In another survey, only 21 percent of students ages 16 to 22 said they have taken a personal finance course in school. Only 26 percent of students ages 13 to 21 said their parents taught them how to manage money.

Only 7 percent of parents said their children have a good understanding of financial matters.

A mere quarter of Americans feel very well informed about managing household finances.

Those statistics alone don’t paint a very pretty picture, do they?  But that’s just the start, a look at the state of financial literacy among our young.

Between 25 and 56 million Americans don’t use banks.

From 1992-2000, disposable personal income rose 47 percent but personal spending climbed by 61 percent. At the same time, the overall personal savings rate fell from 8.7 percent of disposable income in 1992 to zero in 2000.

At the end of 2002, American households owed an average balance of $8,940 on all credit cards, up 36 percent since 1997.

Consumer bankruptcy filings in 2003 hit a record of nearly 1.7 million, or an average of nearly one in every seven households over the past decade. The bad debt costs the average U.S. family more than $500 annually through higher consumer prices.

There is a definite need today for financial literacy education for all ages — effective programs and life-changing initiatives that reach the young and old of all races and all socioeconomic backgrounds.

Effective efforts need to reach the elderly, managing their lives on limited incomes; those planning for their retirement; the workers of today providing for the futures of their families; college students set to enter the workforce; teenagers managing part-time job and allowance income; and younger children who need to learn the value of money and the basic concepts of saving and spending wisely.

That’s not an easy task. But it is one our nation must accomplish to turn today’s highly undesirable conditions around.

Starting in April, Networks Financial Institute at Indiana State University begins a serious push to put financial literacy in the national spotlight.

April is National Financial Literacy Month.

National Financial Literacy Month was the brainchild of U.S. Rep. Judy Biggert, R-Ill. (See story, page 22 of the Spring 2006 issue of "Financial Focus" magazine), who summed things up quite eloquently:
 “If our schools don’t teach the ABCs of finance and economics, our children are more likely to fall into debt and behind in life, especially in today’s global economy.”

Networks Financial Institute is focused on developing programming that specifically benefits Indiana’s residents.

NFI’s financial literacy efforts are encapsulated by its new trademarked My Cash Counts initiative and its related programs. (See story, page 23 of the Spring 2006 issue of "Financial Focus" magazine).

NFI’s new Kids Count program is a financial literacy program for children, including curriculum and activities that will eventually reach children at every grade level throughout the state. In April, NFI will debut its new Kids Count on the Money Bus, a new mobile financial literacy classroom that will be making its way throughout the state to third- through fifth-grade students starting this fall (See story, page 13 of the Spring 2006 issue of "Financial Focus" magazine).

NFI will host a conference in late March that will examine possible solutions to combating the poor level of adult financial literacy in the U.S. today (See story, page 28 of the Spring 2006 issue of "Financial Focus" magazine). 

And NFI’s 2006 Indiana Financial Literacy Conference in April is designed to educate Indiana’s K-5 teachers about today’s leading financial literacy education curricula available for them to utilize within the scope of their daily lesson plans and in coordination with core state of Indiana educational requirements (See story, page 26 of the Spring 2006 issue of "Financial Focus" magazine).

The state of financial literacy in Indiana — and the rest of the nation — is an alarming concern. NFI supports National Financial Literacy Month with excitement and enthusiasm and will use the month of April to strengthen its efforts to educate, inform and reach out to all who need life-long financial knowledge, skills and abilities.

Godsted is director of outreach for Networks Financial Institute: 317.536.0281, Ext. 709 or toll-free 800.603.7113, email at david.godsted@isunetworks.org.