Why Is Saving and Investing Education Important

1. Why Is Saving and Investing Education Important?

2. June 10, 2012 Why Is Saving and Investing Education Important? 2 Overview Increasing financial responsibilities for consumers Are families financially fit? Warning signs Financial education

3. June 10, 2012 Why Is Saving and Investing Education Important? 3 Increasing Consumer Responsibilities Over 92% of pensions today are defined contribution plans, not defined benefit plans. Over one-third of college students have a credit card before they enter college.

4. June 10, 2012 Why Is Saving and Investing Education Important? 4 The Financial World Has Become More Complex The Internet has increased the number of financial services offered to consumers. Credit-scoring technology has improved. There has been an increase in the number of financial products that are offered.

5. June 10, 2012 Why Is Saving and Investing Education Important? 5 People Are Involved in the Financial Markets Millions of small investors have increased their net worth by participating in the stock and bond markets. Millions of other investors depend on income from owning stocks and bonds.

6. June 10, 2012 Why Is Saving and Investing Education Important? 6 Are Families Financially Fit? Results of the Survey of Consumer Finances published in the Federal Reserve Bulletin, January 2003

7. June 10, 2012 Why Is Saving and Investing Education Important? 7 Family Income and Net Worth Median family income adjusted for inflation rose 9.6% 1998-2001. Median family net worth rose 10.4% 1998-2001. The number of families holding corporate equities directly or indirectly rose from 1998 to 2001.

8. June 10, 2012 Why Is Saving and Investing Education Important? 8 Family Saving Families are saving somewhat more today than in the past.

9. June 10, 2012 Why Is Saving and Investing Education Important? 9 Percentage of Families Who Saved (Federal Reserve Bulletin, 2003)

10. June 10, 2012 Why Is Saving and Investing Education Important? 10 Top Reasons for Saving (Federal Reserve Bulletin, 2003)

11. June 10, 2012 Why Is Saving and Investing Education Important? 11 Value of Top Financial Assets of All Families by Type of Asset (Federal Reserve Bulletin, 2003)

12. June 10, 2012 Why Is Saving and Investing Education Important? 12 Family Debt From 1998 to 2001, liabilities of families grew, but assets grew more rapidly. Families� debt-to- assets ratio improved some-what.

13. June 10, 2012 Why Is Saving and Investing Education Important? 13 Amount of Debt of All Families (Federal Reserve Bulletin, 2003)

14. June 10, 2012 Why Is Saving and Investing Education Important? 14 Warning Signs There are, of course, signs of financial danger.

15. June 10, 2012 Why Is Saving and Investing Education Important? 15 Unbanked Households (Federal Reserve Bank of Chicago) About 10 million households are unbanked. Over 57% of unbanked households are minority households. About 37% of African American households are unbanked--they have no checking or savings accounts.

16. June 10, 2012 Why Is Saving and Investing Education Important? 16 Have You Seen Places Like This?

17. June 10, 2012 Why Is Saving and Investing Education Important? 17 Non-Mainstream Financial Services Unbanked households depend on: Check-cashing outlets Short-term lenders Pawnshops Payday loans Rent-to-own stores Unbanked families pay higher fees for using these financial services and face higher risk losses due to dealing in cash.

18. June 10, 2012 Why Is Saving and Investing Education Important? 18 Who Is Unbanked? People who are unbanked tend to: Be of lower income Be younger Have less education Be employed People who are banked tend to: Have a credit card Be older

19. June 10, 2012 Why Is Saving and Investing Education Important? 19 High School Students Most 18-year-olds can obtain credit cards in their own name. Credit-card companies have become more aggressive at marketing to young people.

20. June 10, 2012 Why Is Saving and Investing Education Important? 20 College Students (GAO, 2001) Two-thirds of college students have a credit card; the average is 3 cards per student. About 64% pay off the balance each month. The average credit-card debt for students who carry a balance is $2,200-$2,800. In 2001, 100,000 people under age 25 filed for bankruptcy, 6.9% of all bankruptcies, an increase of 51%, 1991-1999.

21. June 10, 2012 Why Is Saving and Investing Education Important? 21 Financial Education In recent years, financial education has gained attention from many groups: Federal Reserve System Banks Consumer groups Government agencies

22. June 10, 2012 Why Is Saving and Investing Education Important? 22 It�s Hard to Learn What You Are Not Taught Financial education is a growing national priority. Stock market simulations and games are very popular. But young people can�t learn financial skills unless they are taught explicitly.

23. June 10, 2012 Why Is Saving and Investing Education Important? 23 Parents Parents think students should learn about managing money at an early age.

24. June 10, 2012 Why Is Saving and Investing Education Important? 24 When Should Children Learn About Money? (2004, NWM)

25. June 10, 2012 Why Is Saving and Investing Education Important? 25 Financial Education (Federal Reserve Bulletin, 2003) Several studies of financial education programs, especially those with specific objectives such as maintaining a mortgage or increasing savings, have succeeded in improving financial behavior.