Economics and the Personal Finance Domain

1. Economicsand thePersonal Finance Domain Georgia Council on Economic Education w w w . g c e e . o r g

2. One Way to Plan for Retirement Georgia Council on Economic Education w w w . g c e e . o r g

3. The Problem of Economic and Financial Literacy... Georgia Council on Economic Education w w w . g c e e . o r g

4. Bankruptcy Rates by County Georgia Council on Economic Education w w w . g c e e . o r g

5. Bankruptcy Rates, GA Georgia Council on Economic Education w w w . g c e e . o r g

6. Why Is Saving and Investing Education Important? Georgia Council on Economic Education w w w . g c e e . o r g

7. Increasing Consumer Responsibilities • Over 92% of pensions today are defined contribution plans, not defined benefit plans. • Over one-third of college students have a credit card before they enter college. Georgia Council on Economic Education w w w . g c e e . o r g

8. The Financial World Has Become More Complex • The Internet has increased the number of financial services offered to consumers. • Credit-scoring technology has improved. • There has been an increase in the number of financial products that are offered. Georgia Council on Economic Education w w w . g c e e . o r g

9. People Are Involved in the Financial Markets • Millions of small investors have increased their net worth by participating in the stock and bond markets. • Millions of other investors depend on income from owning stocks and bonds. Georgia Council on Economic Education w w w . g c e e . o r g

10. Are FamiliesFinancially Fit? Results of the Survey of Consumer Finances published in the Federal Reserve Bulletin, January 2003 Georgia Council on Economic Education w w w . g c e e . o r g

11. Family Income andNet Worth • Median family income adjusted for inflation rose 9.6% 1998-2001. • Median family net worth rose 10.4% 1998-2001. • The number of families holding corporate equities directly or indirectly rose from 1998 to 2001. • Families are saving somewhat more today than in the past. Georgia Council on Economic Education w w w . g c e e . o r g

12. Percentage of Families Who Saved(Federal Reserve Bulletin, 2003) Georgia Council on Economic Education w w w . g c e e . o r g

13. Top Reasons for Saving (Federal Reserve Bulletin, 2003) Georgia Council on Economic Education w w w . g c e e . o r g

14. Value of Top Financial Assets of All Families(Federal Reserve Bulletin, 2003) Georgia Council on Economic Education w w w . g c e e . o r g

15. Warning Signs There are, of course, signs of financial danger. Georgia Council on Economic Education w w w . g c e e . o r g

16. Unbanked Households (Federal Reserve Bank of Chicago) • About 10 million households are unbanked. • Over 57% of unbanked households are minority households. • About 37% of African American households are unbanked--they have no checking or savings accounts. Georgia Council on Economic Education w w w . g c e e . o r g

17. Have You Seen Places Like This? Georgia Council on Economic Education w w w . g c e e . o r g

18. Non-Mainstream Financial Services • Unbanked households depend on: • Check-cashing outlets • Short-term lenders • Pawnshops • Payday loans • Rent-to-own stores • Unbanked families pay higher fees for using these financial services and face higher risk losses due to dealing in cash. Georgia Council on Economic Education w w w . g c e e . o r g

19. People who are unbanked tend to: Be of lower income Be younger Have less education Be employed People who are banked tend to: Have a credit card Be older Who Is Unbanked? Georgia Council on Economic Education w w w . g c e e . o r g

20. High School Students • Most 18-year-olds can obtain credit cards in their own name. • Credit-card companies have become more aggressive at marketing to young people. Georgia Council on Economic Education w w w . g c e e . o r g

21. College Students GAO, 2001 • Two-thirds of college students have a credit card; the average is 3 cards per student. • About 64% pay off the balance each month. • The average credit-card debt for students who carry a balance is $2,200-$2,800. • In 2001, 100,000 people under age 25 filed for bankruptcy, 6.9% of all bankruptcies, an increase of 51%, 1991-1999. Georgia Council on Economic Education w w w . g c e e . o r g

22. Financial Education • In recent years, financial education has gained attention from many groups: • Federal Reserve System • Banks • Consumer groups • Government agencies Georgia Council on Economic Education w w w . g c e e . o r g

23. It’s Hard to Learn What You Are Not Taught • Financial education is a growing national priority. • Stock market simulations and games are very popular. • But young people can’t learn financial skills unless they are taught explicitly. Georgia Council on Economic Education w w w . g c e e . o r g

24. Financial Education (Federal Reserve Bulletin, 2003) Several studies of financial education programs, especially those with specific objectives such as maintaining a mortgage or increasing savings, have succeeded in improving financial behavior. Georgia Council on Economic Education w w w . g c e e . o r g

25. Why Saving is Important! Georgia Council on Economic Education w w w . g c e e . o r g