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Week Ending April 20, 2006

H.RES.273 Supporting the goals and ideals of Financial Literacy Month, and for other purposes.

The resolution preamble explains that financial literacy is essential to managing money, credit and debt and then proceeds to demonstrate that America is not such a financially literate country.

A study reports that US high school seniors know less about principals of basic personal finance than those 7 years early. Those tested on both occasions averaged failing grades. States including Alabama, Georgia, Idaho, Illinois, Kansas, Kentucky, Louisiana, Missouri, New York, North Carolina, Ohio, South Carolina, Texas, Utah, Virginia, and West Virginia require financial education in high school.

55% of college students acquire their first credit card in their first year of college. 92% have one by the second year but reportedly only 13% to 21 % said their parents actively taught them how to manage money.

Painting a more dismal picture the preamble relates that US consumer debt in 2006 was $2.4 trillion of which $825 billion was credit card debt. On top of that debt, personal savings has dropped to a negative 1% in 2006. Lowest since the Great Depression

Although 42 million participate in 401(k) plans only 42% of workers have calculated how much money they will need to retire and 37% say they are not currently saving for retirement. Specifically, the preamble reports that aside from equity in their homes, the boomer generation has on the average about $50,000 in savings.

10 million households do not have access to mainstream financial products and services and are referred to as ‘unbanked’.

More resolution below…

Sponsor:  Rep. Ruben Hinojosa (D-TX-15^th)

Vote: Passed House 414 to 2 April 17, 2007 (RC 217)

Cost to the taxpayers: No discernible cost

Earmark Certification:   Not applicable to this resolution.

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MORE INFORMATION

Whereas personal financial literacy is essential to ensure that individuals are prepared to manage money, credit, and debt, and become responsible workers, heads of households, investors, entrepreneurs, business leaders, and citizens;

Whereas personal financial management skills and lifelong habits develop during childhood;

Whereas a study completed in 2006 by the Jump$tart Coalition for Personal Financial Literacy found that high school seniors know less about principles of basic personal finance than did high school seniors 7 years earlier, and the average scores in both years were failing grades;

Whereas in recent years, the Congress, State legislatures and Governors around the country have increasingly recognized the importance and effectiveness of financial education, and, as a result, an increasing number of States now require financial education during high school, including Alabama, Georgia, Idaho, Illinois, Kansas, Kentucky, Louisiana, Missouri, New York, North Carolina, Ohio, South Carolina, Texas, Utah, Virginia, and West Virginia;

Whereas 55 percent of college students acquire their first credit card during their first year in college, and 92 percent of college students acquire at least 1 credit card by their second year in college, yet only 26 percent of people between the ages of 13 and 21 reported that their parents actively taught them how to manage money;

Whereas United States consumer debt totaled $2,400,000,000,000 in 2006, of which credit card debt alone exceeded $825,000,000,000;

Whereas personal savings as a percentage of income dropped to negative 1 percent in 2006, the lowest since the Great Depression;

Whereas, although more than 42,000,000 people in the United States participate in qualified cash or deferred arrangements described in section 401(k) of the Internal Revenue Code of 1986 (commonly referred to as `401(k) plans'), a Retirement Confidence Survey conducted in 2004 found that only 42 percent of workers surveyed have calculated how much money they will need to save for retirement and 37 percent of workers say that they are not currently saving for retirement;

Whereas the average baby boomer has only $50,000 in savings apart from equity in their homes;

Whereas a study by the American Institute of Certified Public Accountants found that 55 percent of people between the ages of 25 and 34 maintain an interest-bearing account or other savings instrument, a decrease of 10 percent since 1985;

Whereas studies show that as many as 10,000,000 households in the United States are `unbanked' or are without access to mainstream financial products and services;

Whereas expanding access to the mainstream financial system provides individuals with lower-cost and safer options for managing finances and building wealth and is likely to lead to increased economic activity and growth;

Whereas public, consumer, community-based, and private sector organizations throughout the United States are working to increase financial literacy rates for Americans of all ages and walks of life through a range of outreach efforts, including media campaigns, websites, and one-on-one counseling for individuals;

Whereas Members of the United States House of Representatives established the Financial and Economic Literacy Caucus (FELC) in February 2005 to (1) provide a forum for interested Members of Congress to review, discuss and recommend financial and economic literacy policies, legislation, and programs, (2) collaborate with the private sector, nonprofits, and community-based organizations, and (3) organize and promote financial literacy legislation, seminars, and events, such as `Financial Literacy Month' in April 2007 and the annual `Financial Literacy Day' fair on April 24, 2007; and

Whereas the National Council on Economic Education, its State Councils and Centers for Economic Education, the Jump$tart Coalition for Personal Financial Literacy, its State affiliates, and its partner organizations, and JA Worldwide have designated April as Financial Literacy Month to educate the public about the need for increased financial literacy for youth and adults in the United States: Now, therefore, be it

Resolved, That the House of Representatives--

(1) supports the goals and ideals of Financial Literacy Month, including raising public awareness about the importance of financial education in the United States and the serious consequences that have resulted from a lack of understanding about personal finances; and

(2) requests that the President issue a proclamation calling on the Federal Government, States, localities, schools, nonprofit organizations, businesses, other entities, and the people of the United States to observe the month with appropriate programs and activities with the goal of increasing financial literacy rates for individuals of all ages and walks of life.

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