The State of Financial Literacy
Despite a rising average net worth in the United States in recent years, the real story behind the headlines paints a vastly different picture. The wealthiest 10% of Americans – those who own real estate and have market-based portfolios – have disproportionately been the beneficiaries of wealth creation. For the remaining 90%, the average level of debt is staggering.
Consider the following trends: Car loans were previously three- or four-years long. Purchasers now commit to seven-year loans to qualify. Home loan debt-to-income ratios used to be capped at 28%; presently, the allowed ratio is 43%. Servicing credit card debt now costs the average person almost $1,000 per year in interest. We spend $750 more per year than we should on work-sponsored healthcare, because most employees are ill-equipped to weigh their options effectively. Our retirement accounts contain barely more than an emergency fund should have.
Most of these challenges stem from a very basic problem: two-thirds of Americans cannot pass a simple financial literacy test. And by the time financially-illiterate adults are responsible for learning the system, economic strife is a public health crisis: stress-related illnesses, and drug- and alcohol-abuse are pandemic. Teaching young adults to grapple with personal finances is paramount to their future success and well-being. In fact, our primary and secondary educational institutions should be central to solving financial illiteracy.
You and Your Money: Shaping the Journey
Our financial literacy programming, ‘You and Your Money,’ is designed to introduce personal finance concepts in an easy-to-understand context, with clear and straightforward objectives. In ‘You and Your Money: Shaping the Journey,’ we tackle the basics for teens and young adults: learning to make sound decisions, to set goals and to understand the intersection of these choices and their consequences. The seminar, which can be designed for up to three hours, is highly interactive, as we find this method engages students most effectively.
We begin our discussion with goal-setting. Identifying various lifestyle choices and the financial implications of those choices provides an ongoing framework to the program. Students take a quick quiz at both the beginning and end of the program to assess their comfort with the financial topics. Throughout the seminar, we cover the basic topics of budgeting, saving and investing so students have the essential tools of financial literacy at their disposal. But what distinguishes us from other programs is our equal focus on the context of these topics.
- Economic Realities
- Goal Setting Basics
- Understanding Budgeting
- Paying Yourself First
- The Rule of 72
- Investing Basics
Ilene Slatko, Founder and Principal of DSS Consulting, first wrote ‘You and Your Money’ in 1987. Originally presented on behalf of the Financial Education Center in Northern Virginia, the program grew to standing-room only audiences, TV airing of the programs and video copies available in DC area public libraries. She has been a keynote speaker and conference seminar speaker. As a single mom to two now-grown children, Ilene understands the singular decision-making most teens engage in.
This decision-making tendency and the resulting potential lack of cohesion in a life plan is one of the primary drivers of ‘You and Your Money: Shaping the Journey’.