[Congressional Record Volume 152, Number 37 (Wednesday, March 29, 2006)]
[Senate]
[Pages S2541-S2542]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FINANCIAL LITERACY MONTH
Mr. SESSIONS. Mr. President, I ask unanimous consent that yesterday's
action on S. Res. 410 be vitiated, that the resolution be agreed to,
that the technical amendment to the preamble which is at the desk be
agreed to, and that the preamble, as amended, be agreed to.
The PRESIDING OFFICER. Without objection, it is so ordered.
The resolution (S. Res. 410) was agreed to.
The amendment (No. 3190) was agreed to, as follows:
On page 2, the first Whereas clause, strike
``$11,000,000,000'' and insert ``$11,000,000,000,000.''
The preamble, as amended, was agreed to.
The resolution, with its preamble, as amended, reads as follows:
S. Res. 410
Whereas the personal savings rate of United States citizens
in 2005 was negative 0.5 percent, marking the first time that
the rate has been negative since the Great Depression year of
1933;
Whereas in 2005, only 42 percent of workers or their
spouses calculated the amount that they needed to save for
retirement, down from 53 percent in 2000;
Whereas the 2005 Retirement Confidence Survey found that a
majority of workers believe that they are behind schedule on
their retirement savings and that their debt is a problem;
Whereas during the third quarter of 2005, the household
debt of United States citizens reached $11,000,000,000,000;
Whereas during the third quarter of 2005, individuals
serviced their debt with a record 13.75 percent of after-tax
income;
Whereas nearly 1,600,000 individuals filed for bankruptcy
in 2004;
Whereas approximately 75,000,000 individuals remain credit-
challenged and unbanked, or are not using insured, mainstream
financial institutions;
Whereas expanding access to the mainstream financial system
will provide individuals with less expensive and more secure
options for managing their finances and building wealth;
Whereas a greater understanding of and familiarity with
financial markets and institutions will lead to increased
economic activity and growth;
Whereas financial literacy empowers individuals to make
wise financial decisions and reduces the confusion caused by
the increasingly complex economy of the United States;
Whereas only 26 percent of individuals who were between the
ages of 13 and 21 reported that their parents actively taught
them how to manage money;
Whereas the majority of college seniors have 4 or more
credit cards, and the average college senior carries a
balance of $3,000;
Whereas 1 in every 10 college students has more than $7,000
of debt;
Whereas many college students pay more in interest on their
credit cards than on their student loans;
Whereas a 2004 Survey of States by the National Council on
Economic Education found that 49 States include the subject
of economics in their elementary and secondary education
standards, and 38 States include personal finance, up from 48
and 31 States, respectively, in 2002;
Whereas a 2004 study by the JumpStart Coalition for
Personal Financial Literacy found that high school seniors
scored higher than their previous class on an exam about
credit cards, retirement funds, insurance, and other personal
finance basics for the first time since 1997;
Whereas, in spite of the improvement in test scores, 65
percent of all participating students still failed the exam;
Whereas individuals develop personal financial management
skills and lifelong habits during their childhood;
Whereas personal financial education 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 Congress found it important to coordinate Federal
financial literacy efforts and formulate a national strategy;
and
Whereas, in light of that finding, Congress established the
Financial Literacy and Education Commission in 2003 and
designated the Office of Financial Education of the
Department of the Treasury to provide support for the
Commission: Now, therefore, be it
Resolved, That the Senate--
(1) designates April 2006 as ``Financial Literacy Month''
to raise public awareness about--
(A) the importance of financial education in the United
States; and
(B) the serious consequences that may result from a lack of
understanding about personal finances; and
(2) calls on the Federal Government, States, localities,
schools, nonprofit organizations, businesses, and the
citizens of the United States to observe the month with
appropriate programs and activities.
Mr. AKAKA. Mr. President, I rise today, as in years past, to submit a
resolution to designate April as Financial Literacy Month. I thank my
cosponsors, Senators Sarbanes, Cochran, Lautenberg, Kohl, Stabenow,
Talent, Lincoln, Crapo, Johnson, Dodd, Martinez, Durbin, Inouye,
DeMint, Baucus, Feinstein, Coleman, and Allen. I am pleased to once
again work with colleagues on both sides of the aisle to promote
financial and economic literacy for people of all ages all across
America. This resolution highlights the need to combat financial and
economic illiteracy in our homes, schools, workplaces, and communities,
[[Page S2542]]
and mobilize everyone to better educate themselves and others around
them.
In my State of Hawaii, State Representative K. Mark Takai in a
previous year sponsored legislation establishing April as Financial
Literacy for Youth Month, as I had in a previous Senate resolution, and
this year introduced HB 1920 to redesignate the name of the month as
Financial Literacy Month to broaden the month's focus to people of all
ages. Testimony from State and local officials and community leaders
supporting the legislation included a statement from Ms. Kristine
Castagnaro, Executive Director of the Hawai'i Council on Economic
Education, who said, ``residents of all ages deserve to possess the
skills necessary to make wise choices for their lives and
communities.'' Mr. Brent Dillabaugh, Public Policy Director of the
Hawai'i Alliance for Community Based Economic Development, said,
``Fostering basic financial and economic literacy is one of the most
important aspects in achieving self sufficiency. As credit options
become increasingly sophisticated and difficult to understand it is
crucial that individuals have the capacity to make sound financial
decisions.'' I support such State-level efforts in Hawaii and similar
efforts across the country highlighting the need for us to focus on
these important issues.
Education in personal finance and economics means empowerment,
because it can provide people with the tools they need for sound
decisionmaking. Unfortunately, many individuals do not understand even
the basics of our complex economic system. Although much continues to
be done to provide more Americans with an education in personal finance
and economics, a number of troubling indicators show that many people
are ill-equipped to negotiate life's financial choices.
For instance, scores went up for the first time on the Jump$tart
Coalition's 2004 test of the financial literacy of high school seniors,
but on average, students still failed the exam. States have responded
so that now all recognize to some degree the need for economic or
personal finance in their curriculum. However, according to the
National Council on Economic Education, only 17 States require an
economics course be offered in their high schools and only 15 require
an economics course as a graduation requirement. Moreover, only 8
States require a course be offered with content in personal finance and
only 7 States require students to take such a course. This picture must
improve, as barriers to credit continue to decrease, and credit card
holders become younger and younger. According to a recent national poll
by Junior Achievement, 5 percent of teenagers 13-14 years of age
reported having credit cards, and this percentage doubles to 10 percent
for those 17 years of age, and doubles again to nearly 20 percent for
those 18 and older. Early use of credit should be accompanied by early
education in money management and the basics of economics.
On the other end of the spectrum, a tenth of our Nation's families
are without an account at a mainstream financial institution. The most
common reason people give for not having a checking account is that
they do not write enough checks to make it worthwhile. Still, checking
accounts are useful in a number of other ways and typically serve as
the first formal relationship one will have with a mainstream financial
institution. Opening an account at a mainstream financial institution
is a critical step in the path to homeownership and entrepreneurship
and allows individuals to benefit from the relatively low fees, savings
instruments, and other wealth building opportunities offered by banks
and credit unions.
Increased financial and economic literacy can help people navigate
around the countless pitfalls found in the marketplace. Consumers with
a variety of credit histories can easily find credit in many different
forms. Lenders' aggressive marketing campaigns encourage families to
take on substantial debt for indulgences and luxuries, which can be
harmful if the families are already saddled with debt and are not
saving toward an education or retirement nest egg. Taking out these
loans is irrational, but abusive marketing efforts have resulted in
unprecedented levels of borrowing.
Thus, although the availability of credit has grown dramatically,
financial literacy has not yet increased adequately in response.
Consequently, we are presented with a number of troubling statistics.
Last year's personal savings rate was negative for the first time since
1933, at the end of the Great Depression. A negative savings rate means
that, on average, people are spending more money than they make.
Moreover, the household debt service ratio, which gives a sense of the
proportion of disposable income people are using to pay off their debt,
increased to record levels in 2005. These findings suggest a serious
problem exacerbated by the fact that most workers have not calculated
how much they need to save for retirement, even if they believe they
are behind schedule in their retirement savings.
As policymakers, we need to focus on these issues year round.
However, focusing on Financial Literacy Month in April means that we
have a designated part of the year when we can reassess our efforts to
highlight that worked and improve on those that have not. Once again, I
thank my colleagues for their support of this resolution.
Mr. KOHL. Mr. President, I rise today to join with my colleague,
Senator Akaka, in support of his resolution designating April as
Financial Literacy Month.
Financial literacy is an imperative for all Americans. From creating
a family budget, to managing credit, to saving for retirement--
Americans need to understand financial principles more than ever
before. However, research shows that Americans lack a fundamental
understanding of personal savings, financial planning, and budgeting.
According to the Jump$tart Coalition for Personal Financial Literacy,
over 60 percent of our high school students could not pass a quiz with
basic questions on savings and budgeting. In addition, an AARP survey
found that less than half of those over age 45 could identify and
define basic financial terms such as ``diversification'' or ``compound
interest.''
Financial literacy is critical as more Americans take on more of the
responsibility for managing their retirement savings. Pension plans are
shifting from defined benefit plans, which guaranteed a certain benefit
level for a lifetime, to defined contribution plans, which are based on
the investment decisions of individual employees. Unfortunately, too
many individuals do not have the tools to plan for retirement in a
manner that will guarantee their long-term financial health. In fact,
the Employee Benefit Research Institute found that only 60 percent of
current workers are actively saving for their retirement, and only 42
percent of workers and their significant others have calculated what
their financial needs will be in retirement.
The lack of financial literacy has serious ramifications, not only
for individuals who fail to adequately budget and save, but for the
national economy as well. The personal saving rate has recently turned
negative, and personal saving is a component of national saving, which
drives economic growth.
These trends are certainly troubling. In recent years, the work of
Senator Akaka and others have focused attention on the threat posed by
our Nation's high financial illiteracy rate. For example, Senator
Akaka's Excellence in Economic Education Act promotes financial
literacy in primary and secondary schools. Many groups have developed
innovative programs to reach children of all ages on this topic, and
increased access to formal economics classes has helped acquaint
students with the financial services marketplace. In addition, public-
private partnerships have helped adults increase their financial
literacy and gain a better understanding of long-term financial
planning tools.
It is my hope that this resolution will take another step to help
increase awareness about the need to improve our Nation's financial
literacy, and I am pleased to support it.
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