To move forward our nation’s economic recovery, it is critical that we all recognize the consequences of our personal financial decisions. Accordingly, in April, as part of National Financial Literacy Month, many public and private organizations work together to improve Americans’ financial literacy and ensure they have access to trustworthy financial services and products.
Our challenges as a nation are great. Our student loan debt has surged above $1 trillion, which surpasses credit card and auto-loan debt. This debt jeopardizes our fragile recovery, increases the burden on taxpayers, and possibly sets the stage for a new economic crisis.
According to the Federal Reserve, household debt was more than $13 trillion in 2010, and according to the National Bankruptcy Research Center, the number of personal bankruptcy filings reached 1,500,000 in 2010 – a 9% increase, which is the highest number since 2005.
Perhaps most alarming, a recent nationwide survey also found that over half of the adults in America rank their own financial literacy skills are only “fair” or “poor.” Problems with money management are passed on to children by parents who believe that students are learning money management in schools when, in fact, over seventy percent of teachers do not teach financial literacy.
The importance of strong financial education is undeniably important, especially as young adults take on new financial responsibilities like getting their first credit cards, managing their own finances, and figuring out how to pay for college. Because early financial decisions can have such a huge impact on one’s financial future, it is imperative that people make smart, well-informed money management choices. Increased financial literacy empowers individuals to make wise financial decisions and reduces the confusion caused by an increasingly complex economy.
I am working hard in Washington to make sure the federal government is taking decisive action to promote financial stability on Main Street and Wall Street, which will help create economic opportunities and jobs for American families.
But our nation’s prosperity will ultimately depend on our willingness as individuals to empower ourselves and our families with financial knowledge. We must recognize that a deficit in financial literacy is unacceptable. This is why I have introduced the Young Adult Financial Literacy Act, which would provide grants to universities to fund partnerships with schools or non-profits to provide financial literacy education to students between the ages of 15-24. This is only a first step, but a critical one for our nation’s future.