Guest Editorial: CPAs touting financial literacy for all

Category: Basic Money Management Published: Friday, 09 January 2015 Written by Admin

The CPA profession has been championing the cause of financial literacy for more than a decade. Through volunteer programs, the Pennsylvania Institute of Certified Public Accountants has partnered with libraries, schools, local media and legislators to provide guidance on basic personal financial planning principles.

We have reached thousands of individuals through these efforts, but this is not enough. A more integrated education plan is needed to teach consumers, at a very early age, some basic money management principles.

The numbers tell a frightening tale. Consider the following:

oAccording to the Project on Student Loan Debt, the majority (69 percent) of students graduating from public and nonprofit colleges in Pennsylvania had student loan debt with an average of $28,400 per borrower in 2013.

oIn a survey conducted for the American Institute of Certified Public Accountants by Harris Interactive, 75 percent of respondents said they or their children have made personal or financial sacrifices because of monthly student loan payments. Only 39 percent said they fully understood the burden student loan debt would place on the future. Plus, a whopping 60 percent now have at least some regret over their choice of education funding.

oAccording to a study by Moody's Analytics, people under age 35 have a negative 2 percent savings rate, meaning they are spending more than they have.

oThe most recent Survey of Consumer Finances by the Federal Reserve Board revealed that the lowest quartile of net worth is less than $50, and the mean net worth of the lowest quartile is negative $13,400.

oThe Employee Benefit Research Institute 2014 Confidence Survey reports that 24 percent of workers are not at all confident of having enough money for a comfortable retirement. Fifty-eight percent of workers and 44 percent of retirees report having a problem with their level of debt, and 36 percent of workers report they have less than $1,000 in savings and investments.

Clearly, individuals need help understanding how to manage their money. Learning how to spend and save wisely are life lessons that need to be learned early.

Today's consumers are assuming significant debt at an early age, coupled with the need to begin saving for retirement as young adults, which translates into a need to help our young students grow into fiscally responsible and independent citizens.

In January 2013, the Pennsylvania Task Force on Economic Education and Personal Financial Literacy Education developed four recommendations regarding regulatory or legislative changes to improve personal financial literacy in Pennsylvania's schools.

While the current General Assembly and governor were not able to successfully address this issue, our hope is that the 2015-2016 legislative session, along with Gov.-elect Tom Wolf will work cooperatively to provide a learning environment so our graduates will be prepared to succeed.

Jerry Maginnis is a CPA and president of the Pennsylvania Institute of Certified Public Accountants.

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