NCUA Chairman: 'Most Americans, Especially The Young, Failing Finance'

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NCUA Chairman JoAnn Johnson told a room full of people who know a lot about personal finances that they need to do more to help the many more people who do not.

Active in financial literacy efforts, Johnson noted that of 4,000 high school students recently given a financial literacy test by the Jump$tart Coalition, 65% failed. And that's an improvement over the 68% failure rate just one year earlier.

"Only one-fourth between the ages of 13 and 21 reported that their parents actively showed them how to manage money," she said. "Ask your children or grandchildren why they receive an allowance. Hard work has its rewards, and it's one of the things we need to reinstill in our kids today."

Other troubling statistics cited by Johnson:

* One-in-three American teenagers has a credit card; 98% of teenagers report spending money, rather than saving it, with the average teen spending $104 per week.

* 83% of college students have at least one credit card, and almost half are in credit card debt, with the average debt of more than $3,000. "If you take that at 19% interest and pay it off at the minimum payment, it will take the student 35 years to pay and he will pay more than $10,000 in interest."

* 20% of college students have more than $10,000 in non-school related debt when they graduate. University administrators say they lose more students to credit card debt than to academic failure, Johnson said.

* 40% of Americans say they live beyond their means, and half live paycheck to paycheck. The personal savings rate has decreased from 7.5% in the early 1980s, to 2% today. In World War II it was 24%.

According to Johnson, by saving as little as $50 per month, or one latte a day, in an account paying 5% annually, the $600 saved each year would amount to be $76,000 after 40 years.

"Credit unions don't need to reinvent the wheel with programs," she said. "The key is in the delivery of the programs. You have to look for ways to deliver. Financially secure individuals are better for your credit union, your community, and your country."

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