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What Parents are Saying

• The percentage of income used for household debt (payments, including mortgages, credit cards, and both normal and refinanced student loans) rose to the highest level in more than a decade in 2001 and remained at 14% in 2002. (13)
• 56% of parents believe high school graduates are totally unprepared to manage their personal finances responsibly.
• Only 30% of parents said their child’s high school offered a course on practical money skills.
• 78% of parents said their high school student does not have a budget.
• 57% of parents put no restrictions on how their child can spend the money they are given.
• Over half of the parents surveyed, 62%, require their teens to save at least some of what they earn.
• Out of parents surveyed, 53% said their children generally spend the money they earn on food and entertainment.
• Only 37% of parents said their family will have an itemized back-to-school budget, 61% will not.

American Teenagers:

• As a cohort spent over $172 billion in 2001, equal to Mexico’s yearly exports. (1)
• Average expenditures: $104/ week; $5,408/year (1)
• Teens surveyed by Teenage Research Unlimited reported spending 98% of their money, rather than saving it. (1)
• Children’s spending has roughly doubled every ten years for the past three decades, and tripled in the 1990s. (23)
• More than 1 in 5 youths ages 12 to 19 have their own credit cards or have access to parents’ credit cards, and 14% have debit cards. (1)
• 40% of students are likely to buy a pair of jeans (or something similar) they really want even if they do not have the money to pay for it. 22% percent would pay for it with a credit card. (2)
• One in three carry credit cards, even more have an ATM card(4)
• High School graduates stand to earn over $1 million in adulthood-without adjusting for inflation (5)
• Nearly half of all high school students nationwide have a part time job (16)
• Of the 4,000 students who took the Jump$tart personal finance survey in 2002, 68.1% received failing scores. (21)
• 50% of high school graduates do not go to college and enter the workplace directly. (20)
• By 2004, people from 16 to 22 will comprise the majority of online shoppers despite the fact that they are ill-prepared to manage their money.

American Families:

• • Outstanding non-secured consumer debt rose from $805 billion in 1990 to $1.65 trillion in 2001. (13)
  • 40% of Americans say they live beyond their means. (20)
  • The personal savings rate as a percentage of GDP decreased from 7.5% in the early 80’s to 2.4% in 2002 During World War II, Americans were saving more than 24%. (12)
  • The U.S. has the lowest personal savings rate of any major industrialized nation. (35)
  • The percentage of income used for household debt (payments, including mortgages, credit cards, and student loans) rose to the highest level in more than a decade in 2001 and remained at 14% in 2002. (13)
  • Approximately 10,000,000 Americans, the ‘unbanked,’ are not using mainstream, insured financial institutions. (36)
  • Nearly 5% of consumers are late with their credit card payments. (14)
  • 48% of credit card owners only pay their minimum monthly payment each month. (30)
  • Credit card spending jumped 8.1% in the 1^st half of 2002.
  • Average U.S. credit card debt per household is on the rise: from $2,985 in 1990 to $8,562 in 2002, with an average interest rate of 14.71%. (15), (27)
  • More than half of American families are not saving enough to preserve their standard of living in retirement.
  • Between 1983 and 1998, 2/3rds of the defined benefit or traditional pension plans in the US were terminated. (17)
  • Half of all Americans are living paycheck to paycheck. (19)
  • Christmas 2001 was the highest level of consumer debt in US history. (19)
  • Median pre-tax household income fell by more than $900 from $43,162 in 2000 to $42,228 in 2001. Income dropped everywhere but the top. (19)
  • More than half of American workers between the ages of 45 and 54 did not have any kind of retirement account in 1998. Data compiled in 2000 showed half of those in the 55 to 64 age range had balances of less than $33,000. (22)
  • 66% of Americans don’t pay off their entire credit card bill each month. (25)
  • 69% of Americans plan to work in their retirement years. (28)
  • Life expectancy in the US recently reached a record high, with an average lifespan of 74.1 years for men and 79.5 years for women. (32)
  • One in four women currently retires on an income below the poverty level. (33)
  • Over the next 40 years, the number of women over 85 is expected to at least triple, with 3/4ths of this population single, divorced, or widowed. (33)
  • There are nearly 7,000 mutual funds to choose from. (29)
  • The net worth of the average middle-class American household after accounting for debt is less than $10,000. (31)
  • 50.8% of college-age adults agree with this statement: “I have experienced repeated, unsuccessful attempts to control, cut back or stop excessive money use.” (34)
  • 64.8% of college-age adults agree with this statement: I experience a mood change (high or low) just before or after a shopping event. (34)

College Students:

• • Persons entering college are offered an average of 8 credit cards the first week of school.
  • 55% of college students acquire their first credit card during their first year of college, and 83% of college students have at least one credit card. (11)
  • 45% of college students are in credit card debt, the average credit card debt being $3,066. (11)
  • Undergraduates students carry an average of three credit cards (6).
  • Graduating students have an average of $20,402 in combined education loan and credit card balances. (6)
  • 20% of graduating college students have $10,000 or more in non-school related credit card debt. (26)
  • An increased number of college student borrowers feel more burdened by their education debt, with about 25% of the borrowers perceiving themselves as having significant problems (6)
  • Students who came from low-income families (defined as Pell Grant recipients) report feeling more burdened by their debt than non-Pell recipients, when controlling for all other factors. This is a change from previous studies when there was no significant difference in attitudes between low-income and non-Pell recipients. (6)
  • 28% of students with a credit card roll over debt each month (7)
  • University administrators state that they lose more students to credit card debt than to academic failure (8)
  • In 2001, the credit industry issued more than 5 billion solicitations to consumers, including college students. (18)
  • Only 59% of college graduates agree that the benefits of incurring student loans are worth it overall. (6)
  • Students double their average credit card debt-and triple the number of credit cards in their wallets-from the time they arrive on campus until graduation. (6)
  • College students borrowed in the 90s what they borrowed in the 60s, 70s and 80s combined.
  • Credit card companies usually offer credit limits to college students between $500 and $3000, with higher interest rates than nonstudents, between 18% and 20%. (25)

Bankruptcies, Defaults and Forclosures:

• • The US has recently seen an over 50% increase in bankruptcies among people under age 25 (fastest growing age range for bankruptcies). Bankruptcy filings for this age group were at an all time high in 2000, numbering almost 150,000, which is a tenfold increase in just five years. (4)
  • Non-business bankruptcy filings increased again in 2002 totaling 1,539,111. (9)
  • Non-business bankruptcy filings accounted for the overwhelming majority (97.6%) of all bankruptcy cases filed in calendar year 2002. (9)
  • Home forclosures in 2002 reached the highest rate in 30 years. (11)
  • Mortgage delinquencies have surged to their highest level since 1992.
  • More young adults filed for bankruptcy than graduated from college in 2001. (35)
• Financial Literacy Education
  • Only 21% of students between the ages of 16 and 22 say they have taken a personal finance course through school. (2)
  • Only 26% of 13 to 21 year olds reported their parents actively taught them how to manage money. (2)
  • Only 7% of parents say their child understands financial matters well (2)
  • 94% of students ages 16-22 say they are likely to turn to their parents as a financial information source (2)
  • 30% of youth report that their parents rarely or never discuss saving and investing with them. 47% say their parents rarely or never discuss household budgeting with them (2).
  • 61% of parents say that parents and schools should share the responsibility for teaching children about financial education (2).
  • Research has shown that as little as 10 hours of personal financial education positively affects students spending and savings habits. (10)
  • A Consumer Reports survey of 12-year-olds found that 28% didn’t know that credit cards are a form of borrowing, 40% didn’t know that banks charge interest on loans, 34% didn’t know that you can’t tell how good a product is by how much it’s advertised. (24)

   

  Adults & Parents:

  1. Nearly two-thirds of American adults and students didn’t know that in times of inflation money loses its value. (2)
  2. Half of the adults and almost two-thirds of the students didn’t know that the stock market provides a value for ordinary people to buy stock. (2)
  3. One quarter of American adults confused “budget deficit” with “national debt”. (2)
  4. Only a quarter of Americans feel very well informed about managing household finances. (4)
  5. Among parents with children five or older, only 26% feel well prepared to teach their kids about basic personal finances. (4)
  6. 80% of parents believed that schools provided classes on money management and budgeting. (8)
  7. The Financial Educational Survey done by Capital One found that: (9)
  • • More than 70 percent of parents say they have spoken with their teens about credit and using credit cards wisely, while less than 44 percent of the teenaged children of those respondents say their parents have talked to them about credit cards.
  • • 54 percent of parents rate their teenager’s knowledge about managing money as “good” or “excellent,” while an overwhelming 78 percent of the teenaged children of those respondents rated their knowledge as merely average or even poor.
  8. A research commissioned by Northwestern Mutual reveals the following: (11)
  • • • 43% of parents believe that schools should be doing more to teach kids about money.
      • Almost half of all parents say they don’t set a good example when it comes to handling their own money and are not capable of properly teaching their children.
      • 70% of parents say that most kids in the US today feel a sense of entitlement- that they just expect to have whatever it is they want whenever they want it.
      • 57% of parents say most kids do not understand the value of money.
      • 41% of parents say adults never learned how to manage money properly.
      • 22% of parents think most parents are incompetent or inadequate when it comes to teaching their kids about money.

  
  Students:

  • • 1. The third annual back-to-school survey from Capital One found that: (10)
    • • • 87 percent of college students and 90 percent of high school students rely on their parents for financial guidance.
      • • 98 percent of college students and 90 percent of high school students say they have learned about money management through their own experiences with money. Additionally, 53 percent of collegians and 43 percent of high school students claim to have learned something about money management through talking with friends.
        • 70 percent of college students surveyed say their parents have not given them tips or advice about spending wisely while shopping for school supplies.
        • Capital One’s survey found more than 70 percent of middle school and high school students say they perform odd jobs to earn extra money. Additionally 72 percent of college students have a regular full or part-time job.
      2. 64% of consumers ages 18 to 24 don’t even know the interest rates they pay on their credit cards. (13)
    • 3. In the Jump$tart Coalition survey, 25.7% of the students without any bank account scored lower (46.1%) than those who have a savings account (51.7%), a checking account (50.5%), and both savings and checking accounts (50.2%). (28)
      4. In the Jump$tart Coalition survey, only 26% of 13- to 21- year-olds reported that their parents actively taught them how to manage money. (28)

  
  Other:

  • • 1. 98% of banks responding to this year’s Consumer Bankers Association’s survey said they sponsor financial literacy programs and/or support such efforts through partnerships. (14)
      2. The number of states with personal finance standards or guidelines drops from 40 states to 31 states from 2000 to 2002. (3)
      3. Only 4 states require students to complete a course that includes personal finance before graduating from high school in 2002. (3)
      4. In 2002, just 17 states that have personal finance standards require schools to implement these standards. (3)

   

  American Kids & Teenagers

  • • 1. American children, teens and young adults earned about $211 billion in 2003, down from $231 billion in 2002. (22)
      2. In 2003, Teens spent $175 billion, averaging $103 per week. (6)
      3. In 2003, 8-to-14-years-olds, so-called “tweens”, spent $39 billion a year. (23)
      4. The average adolescent spends about $264 a month. (24)
      5. 11 % of teens 12-19 have their own credit card, an additional 10% have access to a parent’s credit card. (5)
      6. 16% of teens 12-19 have their own ATM cards, and 21 % have their own checking accounts. (5)
      7. Over one-third of the 2002 students surveyed have an ATM card. (28)
      8. Nearly 75% of students surveyed have a saving and/or checking account with a bank. (28)
      9. Children’s spending has roughly doubled every 10 years for the past three decades and tripled in the 1990s. Kids ages 4-12 spent 2.2 billion in 1968 and 4.2 billion in 1984. By 1994 the figure increased to 17.1 billion, and by 2002 their spending exceeded $40 billion. Kids’ direct buying power is expected to exceed 51.8 billion by 2006. (25)

   

  Undergraduate & Graduate Students

  • • 1. A 2001 Credit Card Usage Analysis by Nellie Mae includes the following: (15)
    • • • 83% of undergraduate students have at least one credit card; a 24% increase since 1998.
      • • Average credit card balance is $2,327; a 15% decrease from the 2000 average.
        • Median credit card balance is $1,770; a 43% increase above the median in 2000.
        • 21% of undergraduates who have cards, have high-level balances between $3,000 and $7,000; a 61% increase over the 2000 population.
        • Graduating students have an average of $20,402 in combined education loan and credit card balances.
        • Students residing in the Northeast use credit cards the least, while Midwesterners carry the highest average credit card balances.
        • Students double their average credit card debt – and triple the number of credit cards in their wallets – from the time they arrive on campus until graduation.
        • Although freshmen have the lowest rate of card possession among undergraduates, 54% carry a credit card. The percentage of students with at least one card increases to 92% in sophomore year.
        • Only 23% of freshmen, on the other hand, have a student loan.
        • Average number of credit cards per college student is 4.25. Forty-seven percent of students with credit cards have at least four cards, up from 32% in 2000 and 27% in 1998.
        • 6% of college students have more than $7,000 in credit card debt.
      2. Results of the 2002 National Student Loan survey by Nellie Mae include the following: (16)
    • • • Over 70% of students who borrow to pay for their higher education agree that student loans were very or extremely important in allowing them access to education after high school.
        • 58% of students said student loans were very or extremely important in allowing them to attend the college of their choice; and, of the students who attended graduate school, 72% said student loans were very or extremely important in allowing them to pursue graduate studies.
        • The average undergraduate debt is $18,900 in 2002, up 66% from $11,400 since 1997.
        • Those who attended privatefour-year colleges borrowed most (average $21,200/median $18,400), followed by those who attended public four-year colleges (average $17,100/median $16,200), next were those who attended vocational/technical school (average $15,000/median $11,900), and those borrowing the least attended public two-year institutions (average $8,700/median $7,700).
        • Students attending graduate school borrow, on average, an additional $31,700 beyond their undergraduate borrowing, an increase of 51% since 1997. The median debt level for graduate school borrowing is $23,700, an increase of 72% since 1997.
        • In 2002, the average monthly payment on undergraduate debt is $182, vs. $161 in 1997. This 13% increase in monthly payments is much lower than the 66% increase in undergraduate education debt.
        • In 2001, 4.7 million students borrowed an average of $3,500 under the subsidized Stafford Loan program, and 3.4 million (including some of the same students) borrowed an average of $4,100 in unsubsidized Stafford Loans.
        • 27% of the respondents report having used credit cards to help finance their education. This group had an average credit card balance of $3,400 when they finished school.
        • The typical (median) borrower devotes about 8% of monthly income to debt repayment, and only 6% of income to repaying undergraduate loans. The mean payment-to-income ratios of 11.6% for total debt and 9% for undergraduate debt are high enough to cause many borrowers to feel burdened by their obligations.
      3. About 45% of college students carry a credit debt of $3,066 on average. (21)
    • 4. 72 percent of college students have a regular full or part-time job. (10)
      5. Almost half of college students with credit cards have paid a fee for late payment, and 7% have had a credit card canceled because of late payments. (26)

   

  American Families
  General:

  • • 1. Over 40% of families live off of 110% of their incomes. (27)
      2. Nearly six out of 10 Americans are racing to make changes in their financial situation so they’ll have enough income when they retire. (4)
      3. 85% of adults agree that young adults today lack the basic skills to successfully manage their finances, 49 percent say youth think they are more likely to become millionaires by staring in a reality TV series than by learning how to budget and save wisely and 75% of teens rely on their parents for personal finance information. (18)
      4. 60% of American adults are more likely to turn to family members for advice rather than a financial professional. (12)
      5. A greater understanding and familiarity with financial markets and institutions will lead to increased economic activity and growth. (21)

  
  Debt:

  • • 1. The average credit card balance for the age between 45 and 64 is $6,094. (30)
      2. If you are between ages 45 and 64, chances are that you have twice as much debt as other Americans, not in this age bracket. (30)
      3. The average citizen is drowning in debt; and 75% of credit card holders have maxed out at least one credit card during the past year. (31)
      4. The percentage of income used for household debt payments, including mortgages, credit cards, and student loans, rose to the highest level in more than a decade in 2001 and remained above 13% in 2003. (21)
      5. It can takes decades to pay off a $3,000 credit card balance if you pay only the minimum each month. (13)

  
  Saving & Investment:

  • • 1. Only 20% of Americans were very confident about making good investment decisions. (1)
      2. 23% of Americans do not save anything at all on a monthly basis for long-term goals such as retirement or a child’s education. (12)
      3. Personal savings as a percentage of personal income decreased from 7.5% in the early 1980s to 2.3% in the first 3 quarters of 2003. (21)
      4. Between 25,000,000 and 56,000,000 adults are unbanked, i.e., not using mainstream, insured financial institutions. (21)
      5. Americans on average had socked away only $40,000 in retirement savings and 25% of those surveyed had no retirement account at all. (20)
      6. More than half of American workers between the ages of 45 and 54 did not have any kind of retirement account in 1998. (32)

  
  Bankruptcies, Defaults and Foreclosures
  

  • • 1. Nearly 500,000 people over age 50 were forced to file for personal bankruptcy in 2002. (29)
      2. Personal Bankruptcies were up 19% in 2002 over 2001. (2)
      3. The fastest growing group declaring bankruptcy is young adults age 20 to 24. (26)
      4. Consumer bankruptcy filings in 2003 hit a record of nearly 1.7 million, or an average of nearly one in every seven households over the past decade. The bad debt costs the average U.S. family more than $500 annually through higher consumer prices. (7)
      5. In just 20 years, from 1981-2001, the number of women filing petitions for bankruptcy increased 662%. (19)
      6. If the trend of increased bankruptcies continues, more than 5 million families with children will file for bankruptcy by the end of this decade. (17)
      7. More people this year will file for bankruptcy than will graduate from college. And more Americans will file for bankruptcy than divorce. (17)
      8. Personal Bankruptcies nearly doubled in the past decade. (21)

  
  Students:

  • • 1. The third annual back-to-school survey from Capital One found that: (10)
    • • • 87 percent of college students and 90 percent of high school students rely on their parents for financial guidance.
      • • 98 percent of college students and 90 percent of high school students say they have learned about money management through their own experiences with money. Additionally, 53 percent of collegians and 43 percent of high school students claim to have learned something about money management through talking with friends.
        • 70 percent of college students surveyed say their parents have not given them tips or advice about spending wisely while shopping for school supplies.
        • Capital One’s survey found more than 70 percent of middle school and high school students say they perform odd jobs to earn extra money. Additionally 72 percent of college students have a regular full or part-time job.
      2. 64% of consumers ages 18 to 24 don’t even know the interest rates they pay on their credit cards. (13)
    • 3. In the Jump$tart Coalition survey, 25.7% of the students without any bank account scored lower (46.1%) than those who have a savings account (51.7%), a checking account (50.5%), and both savings and checking accounts (50.2%). (28)
      4. In the Jump$tart Coalition survey, only 26% of 13- to 21- year-olds reported that their parents actively taught them how to manage money. (28)

  
  Other:

  • • 1. 98% of banks responding to this year’s Consumer Bankers Association’s survey said they sponsor financial literacy programs and/or support such efforts through partnerships. (14)
      2. The number of states with personal finance standards or guidelines drops from 40 states to 31 states from 2000 to 2002. (3)
      3. Only 4 states require students to complete a course that includes personal finance before graduating from high school in 2002. (3)
      4. In 2002, just 17 states that have personal finance standards require schools to implement these standards. (3)

   

  American Kids & Teenagers

  • • 1. American children, teens and young adults earned about $211 billion in 2003, down from $231 billion in 2002. (22)
      2. In 2003, Teens spent $175 billion, averaging $103 per week. (6)
      3. In 2003, 8-to-14-years-olds, so-called “tweens”, spent $39 billion a year. (23)
      4. The average adolescent spends about $264 a month. (24)
      5. 11 % of teens 12-19 have their own credit card, an additional 10% have access to a parent’s credit card. (5)
      6. 16% of teens 12-19 have their own ATM cards, and 21 % have their own checking accounts. (5)
      7. Over one-third of the 2002 students surveyed have an ATM card. (28)
      8. Nearly 75% of students surveyed have a saving and/or checking account with a bank. (28)
      9. Children’s spending has roughly doubled every 10 years for the past three decades and tripled in the 1990s. Kids ages 4-12 spent 2.2 billion in 1968 and 4.2 billion in 1984. By 1994 the figure increased to 17.1 billion, and by 2002 their spending exceeded $40 billion. Kids’ direct buying power is expected to exceed 51.8 billion by 2006. (25)

   

  Undergraduate & Graduate Students

  • • 1. A 2001 Credit Card Usage Analysis by Nellie Mae includes the following: (15)
    • • • 83% of undergraduate students have at least one credit card; a 24% increase since 1998.
      • • Average credit card balance is $2,327; a 15% decrease from the 2000 average.
        • Median credit card balance is $1,770; a 43% increase above the median in 2000.
        • 21% of undergraduates who have cards, have high-level balances between $3,000 and $7,000; a 61% increase over the 2000 population.
        • Graduating students have an average of $20,402 in combined education loan and credit card balances.
        • Students residing in the Northeast use credit cards the least, while Midwesterners carry the highest average credit card balances.
        • Students double their average credit card debt – and triple the number of credit cards in their wallets – from the time they arrive on campus until graduation.
        • Although freshmen have the lowest rate of card possession among undergraduates, 54% carry a credit card. The percentage of students with at least one card increases to 92% in sophomore year.
        • Only 23% of freshmen, on the other hand, have a student loan.
        • Average number of credit cards per college student is 4.25. Forty-seven percent of students with credit cards have at least four cards, up from 32% in 2000 and 27% in 1998.
        • 6% of college students have more than $7,000 in credit card debt.
      2. Results of the 2002 National Student Loan survey by Nellie Mae include the following: (16)
    • • • Over 70% of students who borrow to pay for their higher education agree that student loans were very or extremely important in allowing them access to education after high school.
        • 58% of students said student loans were very or extremely important in allowing them to attend the college of their choice; and, of the students who attended graduate school, 72% said student loans were very or extremely important in allowing them to pursue graduate studies.
        • The average undergraduate debt is $18,900 in 2002, up 66% from $11,400 since 1997.
        • Those who attended private four-year colleges borrowed most (average $21,200/median $18,400), followed by those who attended public four-year colleges (average $17,100/median $16,200), next were those who attended vocational/technical school (average $15,000/median $11,900), and those borrowing the least attended public two-year institutions (average $8,700/median $7,700).
        • Students attending graduate school borrow, on average, an additional $31,700 beyond their undergraduate borrowing, an increase of 51% since 1997. The median debt level for graduate school borrowing is $23,700, an increase of 72% since 1997.
        • In 2002, the average monthly payment on undergraduate debt is $182, vs. $161 in 1997. This 13% increase in monthly payments is much lower than the 66% increase in undergraduate education debt.
        • In 2001, 4.7 million students borrowed an average of $3,500 under the subsidized Stafford Loan program, and 3.4 million (including some of the same students) borrowed an average of $4,100 in unsubsidized Stafford Loans.
        • 27% of the respondents report having used credit cards to help finance their education. This group had an average credit card balance of $3,400 when they finished school.
        • The typical (median) borrower devotes about 8% of monthly income to debt repayment, and only 6% of income to repaying undergraduate loans. The mean payment-to-income ratios of 11.6% for total debt and 9% for undergraduate debt are high enough to cause many borrowers to feel burdened by their obligations.
      3. About 45% of college students carry a credit debt of $3,066 on average. (21)
    • 4. 72 percent of college students have a regular full or part-time job. (10)
      5. Almost half of college students with credit cards have paid a fee for late payment, and 7% have had a credit card canceled because of late payments. (26)

   

  American Families
  General:

  • • 1. Over 40% of families live off of 110% of their incomes. (27)
      2. Nearly six out of 10 Americans are racing to make changes in their financial situation so they’ll have enough income when they retire. (4)
      3. 85% of adults agree that young adults today lack the basic skills to successfully manage their finances, 49 percent say youth think they are more likely to become millionaires by staring in a reality TV series than by learning how to budget and save wisely and 75% of teens rely on their parents for personal finance information. (18)
      4. 60% of American adults are more likely to turn to family members for advice rather than a financial professional. (12)
      5. A greater understanding and familiarity with financial markets and institutions will lead to increased economic activity and growth. (21)

  
  Debt:

  • • 1. The average credit card balance for the age between 45 and 64 is $6,094. (30)
      2. If you are between ages 45 and 64, chances are that you have twice as much debt as other Americans, not in this age bracket. (30)
      3. The average citizen is drowning in debt; and 75% of credit card holders have maxed out at least one credit card during the past year. (31)
      4. The percentage of income used for household debt payments, including mortgages, credit cards, and student loans, rose to the highest level in more than a decade in 2001 and remained above 13% in 2003. (21)
      5. It can takes decades to pay off a $3,000 credit card balance if you pay only the minimum each month. (13)

  
  Saving & Investment:

  • • 1. Only 20% of Americans were very confident about making good investment decisions. (1)
      2. 23% of Americans do not save anything at all on a monthly basis for long-term goals such as retirement or a child’s education. (12)
      3. Personal savings as a percentage of personal income decreased from 7.5% in the early 1980s to 2.3% in the first 3 quarters of 2003. (21)
      4. Between 25,000,000 and 56,000,000 adults are unbanked, i.e., not using mainstream, insured financial institutions. (21)
      5. Americans on average had socked away only $40,000 in retirement savings and 25% of those surveyed had no retirement account at all. (20)
      6. More than half of American workers between the ages of 45 and 54 did not have any kind of retirement account in 1998. (32)

  
  Bankruptcies, Defaults and Foreclosures
  

  • 1. Nearly 500,000 people over age 50 were forced to file for personal bankruptcy in 2002. (29)
    2. Personal Bankruptcies were up 19% in 2002 over 2001. (2)
    3. The fastest growing group declaring bankruptcy is young adults age 20 to 24. (26)
    4. Consumer bankruptcy filings in 2003 hit a record of nearly 1.7 million, or an average of nearly one in every seven households over the past decade. The bad debt costs the average U.S. family more than $500 annually through higher consumer prices. (7)
    5. In just 20 years, from 1981-2001, the number of women filing petitions for bankruptcy increased 662%. (19)
    6. If the trend of increased bankruptcies continues, more than 5 million families with children will file for bankruptcy by the end of this decade. (17)
    7. More people this year will file for bankruptcy than will graduate from college. And more Americans will file for bankruptcy than divorce. (17)
    8. Personal Bankruptcies nearly doubled in the past decade. (21)
    9. 
       SOURCES:
       
       1. Teenage Research Unlimited, 2001.
       2. Youth and Money Survey, ASEC,1999 and/or 2001.
       3. National Longitudinal Survey of Youth
       4. Louisiana State University Agricultural Center
       5. NEFE, 2001
       6. Nellie Mae, 2002
       7. Nellie Mae, 2000
       8. Utah Mentor, 2003: The Voice Digital News, 2003
       9. American Bankruptcy Institute, 2003
       10. NEFE, 1998
       11. Senate Resolution 48, 2003.
       12. Bureau of Economic Analysis (NIPA), 2003.
       13. Federal Reserve, 2003.
       14. The Nilson Report
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       40. FleetBoston
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The resounding answer to this question is “NO” they do not! Ask youself this simple question, “Did I need a credit card when I was young?” I’m pretty sure the answer will be another NO.

The next question I always here from parents is, “But our kids need to be developing credit, don’t they?” And my stern answer is, “They will develop credit organically, just like we did. We don’t need them to have to be responsible for more than they are capable of earlier than they need to.”

For lots of reasons, our kids are growing up earlier and earlier and my personal opinion is that it isn’t a good thing. Let’s let them be kids for a while longer. They are already exposed to sex and drugs and stress and busy parent’s lives and expectations well beyond their capabilities, why add one more unnecessary thing, especially one that carries with it so much shame, guilt and responsibility when done incorrectly..

The facts are pretty straight forward and I refrain from quoting figures and statistics but, ccording to this week’s (May 22, 2006) Time Magazine, in an article called, The ABCs of Money, by Wendy Cole, the average credit card debt of Americans ages 18 to 24 doubled to nearly $3,000! And even though 4 out of 5 of these kids have never had a single personal money management class in high school, the article stated more than half have ATM cards (looks like a credit card with training wheels to me) and more than half of the kids surveyed (5775) had already bounced a check!

I say, Where are the Parents in this scenario? Who’s taking responsibility for preparing our youth to not only handle money responsibly but build the wealth it takes to be financially secure and live life to its fullest? Who’s setting the example here for the whole nation? I know I can get a bit fiesy here but at some point we have to step in as parents and make sure, one way or another, that our kids learn how money works. Yet, even before they can do that, most parents admit to us that THEY don’t even have a clue. So, where do I go with the ‘setting the example’ thing? Straight to our government (which remember are simply people who are allowing us to be in debt way past our proverbial eyeballs) that’s where. And one things I stress the kids and adults I talk to now is that it’s our responsibility as citizens to start demanding balanced budgets. Afterall, if even our Uncle (Sam that is) can spend far more than he makes with little if any painful ramifications, why can the rest of us follow suit. Oh yeah, that’s right. We do!

So, let’s get b ack to the crazy notion that your kids NEED a credit card to esablish credit and my contention that they DO NOT. How are they going to establish credit then? Well, think back to how you and I did it?

Over time (high school and college hopefully but at least high school) they will buy bigger and bigger ‘things’ (we call this piddlycrap in our camps if it isn’t a passive income producing asset) and some of those things they can choose to buy ‘on terms’. In addition, most of them at one time or another in their 20’s (if not before) will buy a car and need to finance part of it. This is how WE slowly developed credit when we were young and it’s the best way for our kids to do while they are young.

Another thing you can do, if you must, is put your child on one of your existing credit card accounts–American Express for example. This way your child actually begins to have a little credit tied to his or her name. It’s important to call and talk to your credit card company in detail about this because they are all different.

And lastly, if you’ve absolutely decided that you have to give your child a CC, then take the time to educate them on interest (and remember, it’s compound interest working against them not for them), extra fees, two-cycle billing (ah, don’t know about two cycle billing? Email us and we’ll fill you in!). One of the most important things to get across to them is that they are spending someone else’s money and they must pay that person (cc company) back the amount they ‘borrowed’ plus a rental fee (interest) if they don’t pay it back in full each month. College kids are charging huge amounts of money and they aren’t making money to even begin to warrant the payments.

The second thing you must show them is how that interest they’ll be paying will add up over time and quickly at that. Show them how a simple item like a pair of $50 pair of jeans (if there is still such a thing) will end up costing them twice what they originally paid for them.

For more information, simply type in ‘credit card education’ into Google and you’ll be amazed at what comes up. Here’s a couple of great resources:

Young Money Website

Beware of Student Credit Cards

If someone sent you this article and you’d like to read more interesting tips, trick and philosophy on money and life, sign up today for Elisabeth’s FREE Weekly E-Zine, Financial Wisdom with a Twist and FREE monthly teleseminars at UltimateAllowanceBook.com.

Whoever came up with the saying “money does not grow on trees” should be fired. I assume they either didn’t read or agree with Benjamin Franklin who said “money is of a prolific generating nature.”

Wouldn’t it be wiser to use the “money and trees” saying to motivate kids and young adults to become disciplined savers and investors?

It’s a perfect metaphor to help explain the compounding principle. Just ask kids to picture orchards and orchards filled with trees, filled with fruit, filled with seeds, which all started from one seed.

After all, compound interest is one of the most-compelling and persuasive tools available to encourage short-term sacrifice for long-term gain. Furthermore, disciplined savers and investors are rarely free spenders, thus accomplishing both objectives.

Money’s ability to compound is of one its’ most intriguing and beneficial features. Compounding does not discriminate. Its magical characteristics work for anyone who chooses to employ it, regardless of their ethnic, economic or social background.

The concept is so powerful, Steve Rosen, Kansas City Star Kids and Money columnist, wrote that it’s possible over a lifetime to become a millionaire while earning minimum wage. As incredible as that sounds, the math bears it out.

One of my favorite ice breakers to help initiate a conversation regarding this astounding principle is by asking the old question, “would you rather have $10,000 or a penny a day doubled for 30 days?” It turns out that a penny a day doubled for 30 days adds up to more than 10 million dollars! Of course, no investment doubles daily, but it’s a fun way to introduce this important concept.

Another great ice breaker is to ask how many times a dollar would have to double in order to reach a million dollars? The answer is 20. You can then add to the fun by asking “how much money a person would have after ten doublings of the dollar?” The answer is $1,024. Half the work amazingly equals less than one tenth of one percent of the benefits. What a huge error it would be to become distracted and disrupt the doublings at this point, say to purchase an X Box, a Home Video System or some other “necessary” item.

The largest doubling is the last doubling, which is worth $524, 288 and is equal to the sum of the first 19 doublings. However, the twentieth and last doubling isn’t possible without the first and smallest doubling, from one to two.

When something compounds, it grows at a much more rapid rate than one expects. Time is a major ingredient in the compound interest formula, so the longer money remains deposited or invested, the greater and more magical the compounding effect. This explains how it’s possible to become a millionaire over a lifetime while earning minimum wage.

Let me provide you a few examples of this principle in action.

If an 18-year-old saves $100 per month and earns 6% until the age of 65, he or she will have accumulated $313,187, while only investing $56,400. However, if he or she delays the decision until age twenty five, he or she will accumulate only $199,149, while investing $48,000. The difference is $114,038.

If the saver happens to earn a higher return of 9%, which is possible but requires more risk, than the difference in either deferring or being unaware of the decision is even more consequential — $420,417. The 18-year-old would accumulate $888,549 versus $468,132 for the 25-year-old. The actual dollar difference in what they would have invested would be $8,400. Whether they earned 6% or 9%, earning an additional $114, 038 or $420,417 by starting sooner rather than later is a smart way to accumulate money.

Simply stated compound interest allows the saver to earn interest on interest as opposed to just interest on principal. For example, assume money deposited for one year earns one hundred dollars in interest. During year two, the original money deposited will earn another year’s worth of interest or an additional one hundred dollars. However, during year two, the one hundred dollars of interest earned in year one also earns interest, catalyzing the compounding effect.

Fortunately, you don’t necessarily have to be able to explain this principle in order to use it as a motivational tool. All you have to do is expose kids to a compounding chart or calculator. You can find charts in personal finance books and financial calculators online. I suggest the online calculators because you can personalize saving and investment projections, which will add more motivational fuel to the fire. Or you can always ask your local credit union or bank manager for help.

In summary, the sooner one starts, the less it takes to reach one’s goals. So, if it is security and riches you want to create, start saving and investing early, not late.

Sam X Renick is the author of two financial books for children: It’s a Habit, Sammy Rabbit! and Will Sammy Ride the World’s First Space Coaster?; he also produced the music CD titled Get in the Habit!; and is the founder of The It’s a Habit! Company, Inc., (www.itsahabit.com), a socially conscious corporation dedicated to providing parents and educators with wholesome, entertaining and educational tools that help them encourage children to develop good habits, especially saving money.

Did You Know?

Did you know splurging on a $3 coffee drink daily for a 15 year old is a one million-dollar life time decision? The same can be said for drinking two, 16-ounce bottles of designer water daily versus purchasing store bought water by the gallon. Ditto sodas purchased by the can or 20 ounce bottles versus by the liter.

What other million dollar habits and decisions do you see kids making?

If someone sent you this article and you’d like to read more interesting tips, trick and philosophy on money and life, sign up today for Elisabeth’s FREE Weekly E-Zine, Financial Wisdom with a Twist and FREE monthly teleseminars at UltimateAllowanceBook.com.

Want to Make a Difference This Summer? Mentor a Child

Think back. Depending on your age, way back. Was there someone in your life that took you under their wing, taught you a think or two, made an impression on you that you’ll never forget? That person was a mentor to you; in whatever area of your life you needed at the time.

Why not return the favor? Kids these days are starving for attention, guidance, leadership, role-models, instruction and acceptance in almost all areas of their lives: family, relationships, job/career skills, money, music, sports, communication. You name it and there’s more than likely a handful of young adults in your vicinity who could benefit from a little bit of your focused time and energy.

WHY MENTOR – Mentor’s perspective

Because it makes a difference. Because YOU make a difference. I remember a teacher named Pat Ingram who I took a course from in college called The Aesthetics of Human Movement. Our first invitation was to introduce ourselves with only our first name and something unique about us so as to give our classmates a glimpse into who we were as well as let her know who was in the room. I remember describing myself as “I am Elisabeth and I will never know what I want to do when I grow up.” Our first assignment was to go hug a tree and then turn in an assignment about the experience. We asked her in what form was the assignment to be done. She said, “You decide. It’s your assignment.” So I wrote a poem.

What did I learn from Ms. Ingram? That our uniqueness was precious and that there was no one way to do anything. At 19, this mentor changed my entire view of the world and I’m eternally grateful. Between having a Mom who said I could do anything and this lady who showed me that every way was A way, I have thrived.

Mentor because you have information to share. Mentor because you have a philosophy that can set a child up for success. Mentor because it will remind you what’s important in life. Mentor because there’s a child who needs you. Mentor because it will simply make you feel great!

WHY MENTOR – Child’s Perspective

• Improves their self-confidence
• Improves their attitude
• Increases their interest in staying in school
• Gives them an interest they may not have realized they had
• Shows them what they DO and DO NOT want to do in life
• Improves their ability to relate to others (peers and family)
• Decreases the likelihood of getting into drug or alcohol use or delinquent behavior
• Teaches them distinct skills they can use for the rest of their lives which in turn, increases their self-esteem and confidence
• Can help them learn to be a team player

Will You Make A Good Mentor?

Good mentors possess the following qualities:

• Able to make a time commitment. If you think you’re too busy now, find a child to mentor. For some reason you will find yourself working much more efficiently so that you can give the needed time to the child!
• Ability to be patient. Mentors often want the child they work and play with to change dramatically overnight. Give them time and don’t be attached to a particular ‘result’ from your spending time with the child. Let them absorb, experience, reflect. Ask lots of questions; just spend the time and enjoy the process. Get your ego out of the way. There is no right result from mentoring. There is only spending time and sharing.
• Good listener
• Tolerant, non-judgmental
• Reliable and consistent
• Have good communication skills
• Have a great sense of humor and are able to be a kid yourself (this really helps)
• Last, but not least, you MUST like kids:-)!

Finding a Child to Mentor

There are so many kids out in the world who need our help, it’s easy to find them. Here’s a couple of suggestions.

• Ask a friend, family member or co-worker if they know of a family with a child who could use a mentor.
• Call your local junior high or high school and talk to the principal or counselor.
• Contact your local boys and girls clubs, and other children’s organizations
• Research and contact specific mentoring programs in your areas (Big Brothers/Big Sisters)

How To Proceed Once You’ve Found a Child to Mentor

How you proceed depends on whether you’re doing the mentoring yourself or doing it through an organization. If through an organization, they will have very specific rules and regulations that you must follow in order to qualify to be a mentor. This can be both a good thing and a restrictive thing. Depends on you and your personal goals in terms of mentoring.

If you are doing this on your own, here are some guidelines and ideas for working with your mentoree:

• Spend time at first just getting to know the child. Ask lots of questions, let the child get comfortable with you and share as he or she wishes. Let them do the majority of the talking. If you get a child that is quiet, let that be OK.
• Ask the child what he or she would like to get out of the relationship. You may even want to write it down and sign an agreement so that you are both clear about your commitments to each other and your intentions with the relationship.
• Let the child know the types of things, skills, etc. that you can share with him or her. You may want to make it OK to explore areas that you aren’t familiar with together. Kids love to learn things with adults; it makes them feel like it’s OK to not know everything. (Yes, it’s OK to not know everything!)
• Set an intention at the beginning of each meeting. What do you both want to get out of it? Evaluate the result at the end of the meeting.
• Spend enough time each week to make a difference. 30 minutes here and there probably won’t do it. Two to three hours (or more depending on your situation) is probably a reasonable goal.
• Don’t look to your mentoree to be a free employee for your business. This is not their role though having them learn what goes on in your business can be a great intention if that’s what THEY want.
• Make the time you spend with them and the information you share with them confidential and tell them so at the beginning. And then stick to it. The child must be able to trust you and feel comfortable sharing with you. If you want to share a funny story they tell or a joke or experience, ask them before sharing with others. And if they say No, respect their request.
• Encourage the child to make mistakes. This way they learn that there is so such thing as perfect and that it is a perfectly acceptable way of learning. Talk about successful people (Alexander Graham Bell comes to mind) who made mistakes only to eventually change the world because they were persistent.
• And lastly, remember that the best way to mentor another is to set an example of what you most want them to learn. This will lead to the biggest and most profound results in your mentoring relationships with others (regardless of age!).

For more information about about being a mentor or mentoring organizations or opportunties in your area, just hop on the internet and type ‘mentoring’ into Google.

Remember that you may never know how you changed the child’s life but they will never forget it.

We often accuse our children (and partners) of taking things, or us, for granted. A positive way to look at this is to recognize that the children and partners feel comfortable and secure in us being there. The negative to this can sometimes lead to wishing they were a bit more grateful for us, and for everything else, in their lives. The question is, How DO you teach, or inspire, the power of gratitude in your children. Well, here’s some ideas:

1. Set the Right Example.

Hopefully, we all have learned that the “Do what I say, not what I do.” method of parenting doesn’t work very well for teaching most things to our children. That being said, it’s critical, just as with teaching them about money, that you set the best example possible for your children. Remember that they learn three ways; by what they see you do, what they hear you say and by the experiences you expose them to. Let them watch YOU be grateful, hear YOU speak words of gratitude on a regular basis and put them in situations where they can experience being grateful for things.

2. Great a Gratitude Journal.

Buy yourself and each one of your children a special journal, or make them with paper and notebooks they can decorate themselves, and make it your Gratitude Journal. Each day create a family morning ritual of writing down at least one thing each of you is grateful for that day. You’ll be surprised at what you come up with after awhile. One day you may find that you’re eating something salty and feel grateful for your taste buds!

3. Focus on what you HAVE instead of on what you DON’T have.

In this day and age of want, want, want, toy, toy, toy, it’s often hard for kids to realize just how well they have it. Heck, the way many adults talk, they don’t even realize it themselves.

Even if you’re in a family that doesn’t make a lot of money, you can find so many ways you have it so much better than the majority of human beings on earth. And if you don’t think so, try doing a simple search on Google. Look up “human suffering” and see what comes up. Sometimes seeing how badly others have it makes kids, and adults, realize how well off they are.

4. Do the Gratitude Dance (cute little YouTube video I found for you)

Believe it not, sometimes just taking a few minutes to move your body to music or a little stretching will move you from a place of negativity to a positive place of gratitude and happiness. Try it, it certainly can’t hurt! I’m dancing to music right now as I’m writing this for you and it feels so good!

So, what are YOU grateful for at this minute? Just something to think about.