The Importance of Teaching Children to Save

According to a National Financial Capacity Survey by FINRA in December 2009, the financial landscape in the United States has changed significantly over the past decade.
  • Retirement: Shift from pension plans to participant savings 401 (k) type plans
  • More complex financial products: mortgages, savings and investing products
  • Greater choices in financial products means greater complexity of choices
  • In addition, the price tag for many components of the American dream - including purchasing a home or funding a child's college education - has risen since the 1980s and 1990s. Especially with respect to college tuition costs, that trend promises to continue.
Against this backdrop, the consequences of not having the necessary skills to make sound financial decisions become ever more severe. This is particularly true in times of economic instability, when resources may be more limited and negative financial events, such as the loss of a job or a sharp decline in income, more frequent.

Survey Results:
  1. Making Ends Meet. Nearly half of survey repondents reported facing difficulties in covering monthly expenses and paying bills.
  2. Planning Ahead. The majority of Americans do not have "rainy day" funds set aside for unanticipated financial emergencies and similarly do not plan for predictable life events, such as their children's college education or their own retirement.
  3. Managing Financial Products. More than one in five Americans reported engaging in non-bank, alternative borrowing methods (such as payday loans, advances on tax refunds or pawn shops). And few appear to be knowledgeable about the financial products they own.
  4. Financial Knowledge and Decision Making. While many American adults believed they were adept at dealing with day-to-day financial matters, they nevertheless engaged in financial behaviors that generated expenses and fees and exhibited financial products or shopped around before making financial decisions.
Current Statistics:
  • Personal Savings Rates remain around 4% nationally as consumers face ever-increasing costs.
  • Unemployment: Virginia average Dec. 2011 - 6.1%; while many Virginia communities exceed 15% unemployment rates, courtesy Virginia Employment Commission.
  • 50% of renters in Virginia are cost burdened and 36% of Virginia households live in liquid asset poverty without adequate emergency funds. In addition 52% of Virginia consumers have subprime credit, courtesy CFED Assets and Opportunity Scorecard- Virginia 2012
Reversing these negative trends will largely be dependent on Americans abililty to control spending, reduce debt and increase savings. Increasing public awareness about the need for savings is essential to family security.

Savings Campaign:
America Saves is a public awareness campaign of Consumer Federation of America. This campaign is created to inspire Americans to change their financial behaviors to increase savings and reduce dependence on debt.

Virginia Saves is a campaign to help Virginians to prepare for their futures by increasing their allocations to savings. This campaign is not designed to sell products but to increase financial knowledge.

Like most public awareness campaigns, children tend to be early adopters and can be great influencers of family behavior. This piggy pageant is designed to educate children about the need for savings while engaging them in a fun creative activity.

To learn more about the benefits of saivngs and ways to begin savings: or  

1 comment:

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