The financial reform bill that Congress hopes to pass by the Fourth of July consists of establishing a new Office of Financial Literacy. The new Dodd-Frank financial reform bill also contains a new Consumer Financial Protection Bureau to enforce ethical behavior from banks. But ultimately, consumers may have to educate themselves about money management to stay out of financial trouble. The Office of Financial Literacy is going to try to make it easier.
Resource for this article: Office of Financial Literacy tucked away in financial reform bill by Personal Money Store
Financial literacy of the national strategy
The Office of Financial Literacy as written to the Dodd-Frank financial reform bill isn’t really the first effort by the government to encourage financial management from consumers. A 2003 law that gave people a free credit report at least once a year also established the Financial Literacy and Education Commission, which has been charged with developing a national strategy for financial literacy. In 2004 the FLEC launched the MyMoney.gov site to provide a central location where consumers can discover money management tools and useful government financial data.
The great FLEC financial literacy website
The FLEC’s financial literacy website got a new look. The new version of the site gives consumers online access where users can find information about how to plan for life events that have financial implications, such as birth or adoption of a child, home ownership or retirement. There are also answers to questions about a variety of personal or professional situations. MyMoney.gov will give users money-management tools including a savings calculator, household budget worksheets and a college prep checklist.
Americans seem to be lazy about finances
A lot more than regulation, the government has pushed knowledge to promote financial literacy. The conjecture is that the more high-quality details and money management tools consumers seem to have, the better choices they will make. But Americans appear to be financially lazy. It’s common knowledge that we should spend less, conserve more and then try to shop around for the best credit card rates. Many people really don’t.
Lacking big time is the American financial literacy
In a survey that was done about American financial literacy, the Wall Street Journal reports the Finra Investor Education Foundation — the research arm of the securities industry regulator — found that about half of those 45 or older hadn’t tried to calculate their retirement needs. About half of almost 1,500 people who took the survey admitted to occasionally carrying a credit-card balance and paying interest. Only five knew that when interest rates rise, bond prices fall. In addition, the survey found that 57 percent of adults who earn a lot more than $ 75,000 a year do not shop around for credit cards, and 46 percent do not compare prices on automobile financing. Also, adults do not usually check their credit records each year.
Debt to income ratio is key
Debt is a big consequence of financial literacy. According to Seerpress.com, despite the fact that the current average debt-to-income ratio of in The US is down to 122 percent from 133 percent in 2007, it nevertheless should be below 100 percent. In contrast, from 1960 to 1985, the debt-to-income ratio in The United States was way below 70 percent. The government is trying to do its part by imposing stricter policies and offering free advice. But true financial literacy could be as simple as not spending a lot more than you make. That is a personal responsibility.
Discover a lot more information:
FLEC website
205.168.45.52/
Wall Street Journal
online.wsj.com/article/SB10001424052748703280004575309143171720002.html?mod=WSJ_hpp_MIDDLENexttoWhatsNewsTop
Seerpress.com
seerpress.com/four-things-that-could-help-you-financially-understand-money-save-money-stop-borrowing-money-and-think-outside-of-the-financial-box/1795/
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