Let's face it, financial planning can seem complex and a bit scary. The problem is you were probably never taught how to manage your money. Some parents don't teach children about money because they think they shouldn't talk about money with children, don't have the time, or think they don't have enough money. Parents should take the time to teach children about money regardless of income and should start when children are young. Studies show that high school seniors nation wide averaged 52% when tested on personal financial basics, Rhode Island students did worse than average with 48.8%. Positive credit history helps to achieve your dreams, like owning your own home while a poor credit report can close doors -- to mortgages, financing your own business, and even to getting a job. My guest in studio was Jim Hedemark, the founder and executive director of the Rhode Island Jump$tart Coalition, the local chapter of the Nationwide Coalition dedicated to increasing the personal financial literacy of youth and other vulnerable populations in Rhode Island, and he offered some startling statistics:
Credit decisions made early in life can cost or save a person up to $250,000 in interest fees over a lifetime. In 2005, savings rates dipped to minus .5%, something that hasn’t happened since the Great Depression in 1932 and 1933. A negative savings rate means that Americans spent all of their disposable income and dipped into past savings or increased their borrowing. People in the 18 to 24 age bracket spend nearly 30% of their monthly income just on debt repayment – double the % spent in 1992. $500 is the average increase in consumer prices absorbed by U.S. families as a result of bad debt losses.
To raise awareness among teens and young adults about the importance of credit smarts, The Rhode Island Jump$tart Coalition has partnered with the US Treasury Department, and the American Banker’s Association to help promote
Get Smart About Credit Day on Thursday, October 19, 2006. On this date, bankers will help teach students how to budget, use credit cards responsibly, and build a positive credit history so they can make smart choices later in life. To date, The A.B.A.E.F. programs have helped more than 1.5 million young adults.
Dan Iannicola Jr., Deputy Assistant Secretary for Financial Education U.S. Department of the Treasury, who has the distinct honor of having the longest title of anyone I have ever interviewed! joined us by telephone to tell us about what his office does, Mr. Iannicola advises the Assistant Secretary of Financial Institutions on matters pertaining to financial education, including the development, analysis and execution of policy. Since joining Treasury, Mr. Iannicola along with his staff, have pursued an aggressive agenda advancing the cause of financial education by traveling across America to assist local programs, testifying before Congress on the subject and leading a group of 20 agencies to coordinate the federal effort on financial education.
The Rhode Island Jump$tart Coalition was founded in May of 2004.The coalition convenes stakeholder forums (the financial literacy roundtable), supports educators through best-practice continuing education opportunities (Financial $marts for Students Educators’ Conference), provides student-based activities (March Smartness: the RI LifeSmarts competition) and conducts awareness campaigns (April is Financial Literacy Month as per Gubernatorial & Legislative proclamations).
This Week’s Real Estate Insight: For some people the American Dream of owning their own home is just that, a dream, because they were never taught how to properly manage their money.
The benefits of teaching our young people good money habits make it well worth the effort, Children who are not taught these lessons pay the consequences for a life-time.
For more information on this week’s guests: Rhode Island Jump$tart Coalition
http://www.rijumpstart.org/ American Banker’s Association
http://www.aba.com/Consumer+Connection/getsmartaboutcredit.htm U.S. Department of Treasury Education Office
http://www.ustreas.gov/education/
