GOLDEN VALLEY, Minn. - April is designated as "Financial Literacy Month". There is clearly a need for better financial knowledge and money management skills for all ages; especially for young adults forming financial habits that they will carry with them throughout their lives.
Dan Ament, Financial Advisor with Morgan Stanley in Wayzata visited KARE 11 Sunrise to discuss a recent survey on the topic.
2013 Financial Literacy Survey
Not enough savings - Overall, 57 percent of Americans indicated they are worried over a lack of savings, including forty-three percent who are concerned about not having enough "rainy day" savings for an emergency, and 38 percent concerned about retiring without having enough money set aside. Although fairly evenly divided, the data suggest that having enough money to resolve daily emergencies takes precedence over the longer term retirement planning.
Paying bills on-time - A total of twenty-six percent of U.S. adults, or roughly 61 million people , were worried about servicing their debt commitments. The good news? 71% of respondents (more than in 2011 and 2012) said they pay all of their bills on time.
Credit cards - Bad news: 37% of adults (about 86 million people) carry credit card debt from month to month. Good news: The percent of adults in this category has steadily declined since 2009 when it was at 44%. Consider this: Making just minimum payments of interest + 2% of balance at 15% interest on a $5,000 credit card balance would take 331 months to pay off and you would have paid over $7,500 of interest over the more than 27 years!
Personal Finance Knowhow: About 1/3 of adults state they learned what they know about financial matters from their parents, (hint ... talk to your kids!) yet 78% agree that they could benefit from additional advice and answers to everyday financial questions.
What's your grade? 40% of respondents give themselves a grade of C,D or F on their knowledge fo personal finance.
Teach your kids - Given the challenges for adults, it isn't any surprise that many young people finish school with little understanding of financial matters. So what do you want your children to know? A simple checklist should include helping them learn before high school about the difference between needs and wants, how to save, how much people really earn and how a simple budget works. Last but definitely not least, teach them about credit and using it wisely. Don't underestimate the value of talking about these topics with your kids. While we have all heard it many times before, talking through it with your children may provoke some changes in your own financial life.
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