Why Financial Literacy

A recent survey done by the Jump$tart Coalition reports the following dismal statistics about the state of our young people’s personal financial I.Q., namely:

• Just 10 percent of our youth are graduating from high school with any kind of instruction in personal finance.
• The average high school student failed a basic financial literacy test with an average score of 52 percent.
• White students scored an average of 55 percent.
• African Americans scored significantly lower at 44.7 percent.
• Hispanics, 46.8 percent.

Additional startling statistics from the Partnership for After School Education (PASE) are:

• In 2005, for the first time since the Great Depression, the US personal savings rate fell into negative territory. That means people spent not only all of their post tax dollars, but had to dip into their savings to cover expenses.
• From the 1970’s through the mid 1980’s, the personal savings rate averaged 10 percent. It has been in decline ever since.

The Partnership for After School Education (PASE) went on to emphasize that this is not a sustainable practice as people put off saving for emergencies, long-term goals and retirement. PASE attributed this very discouraging financial behavior of our young people due to the fact that our youth are not receiving sufficient education around financial issues. As a result, our young adults are ill-prepared to take on the increased responsibility they face when they get to college and/or enter the workforce.

As a whole, PASE pointed out that the people in the United States live beyond their means, to wit, spending more than they earn.

Source: Partnership For After School Education (PASE)

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