Thursday, August 14, 2008

A Summary of "Financial Literacy: A Plan for All Ages" - By John E. McWeeney, Jr.

(Condensed from New Jersey Banker, Summer 2008)

As our nation and our economy struggle through the fallout from the subprime mortgage crisis, it's apparent that the need for widespread financial education has never been greater. How many foreclosures might have been averted if homeowners had been better educated on mortgage products?

The same holds true for teaching young children to save, training young adults on budgeting and the proper handling of their deposit accounts, credit cards, and protecting senior citizens from financial predators. The American Bankers Association says that at present, as many as 86% of students in the U.S. have never taken a course in personal financial education. The need is magnified by the exploding population of new immigrants who don't speak English and who have not entered our banking system .

The challenge is great and developing a solution will require a collaborative effort on the part of both the public and private sectors. The good news is that the banking industry is putting forth positive and lasting efforts to promote financial literacy.

An example of a local New Jersey Bank who has found success with their teaching program is illustrated below:

First Hope Bank

Introduced in 2004, the bank has worked in conjunction with Great Meadows School Librarian Helene Palestri and her Young Savers Program, made up of first - through fifth- graders, who make deposits weekly into First Hope KIDS (Kids Investing Dollars Sensibly) acounts by visiting the school library, which is transformed into a bank, where fifth grade "tellers" collect, tally and credit the money. There's even a "branch manager" to welcome young bankers and direct them to an available teller.

Palestri says, that "the fifth grade teller jobs are very much coveted." The children must complete an application before being offered the position and that each teller has a name plate and a "work basket" containing a calcualtor, and stamp date and deposit slips. The Manager, Dawn Barbera, of First Hope's Great Meadows Office says the children "get a kick out of watching their money grow through interest." The program is a huge hit with parents and children alike.

Wednesday, August 13, 2008

Financial Illiteracy Hits "Home" Revisited- by Patrick L. Ryan

(Condensed from New Jersey Banker, Summer 2008)

In order for our young adults to meet the needs of their future and and that of their future families, there must be an educational foundation put in place to help off-set our current trends in financial illiteracy, namely our current mortgage crisis. Those who succumbed to great salesmanship of low teaser rates and minimal monthly payments, and who are now discovering how risky those loans really were and the unbearable financial burdens they must bear after those low introductory rates conclude. Hence, our on-going crisis of home foreclosures and bankruptcies.

Slick sales presentations, easy credit and lax regulation are a significant part of the problem, but our first line of defense is ourselves and our financial literacy. Understanding compound interest, the mechanics of a loan agreement and the applicable mortgage tables are vital skills which all of us need to survive the financial realities of the 21st century.

All the writing and mathematical skills carefully taught and absorbed over an educational career will not allow today's young adult to recognize the importance of early retirement planning, personal finance, credit card management and the elements of the myriad mortgage contracts available today without specific financial training.

The lack of financial literacy training in the prevailing educational systems is as serious a deficiency as can be imaginable. False financial moves early in life involving student loans, credit cards or other instruments can haunt young people for the rest of their lives through large debt loads and the expensive consequences of a poor credit score.

The public education system must take notice of this hole in its programs and address the matter, or many financial lives will continue to be damaged and essentially lost!

Wednesday, August 6, 2008

What Gifts Should We Give to Our Children? -- By Tony Pellegrino

As we struggle to establish a footing in our economic downslide, who has the time to consider what gifts we should give to our children? Do we give them a gift of almost $300,000,000 in debt? Do we give them a better or worse society than the one we have created? Do we merely satisfy all their instant material cravings? Exactly what should we give to our children?

As the father of five children, I am confused as to what gifts we are giving or should be giving to our children. What attitudes are we putting in their minds? When only 200 of our graduating students wish to obtain a higher education, what are the other 600 students going to do without it? Will they either join the military or join the ranks of food stamp recipients? What ideals and ambitions are we, as parents, instilling in our children?

My own parents were immigrants from Sicily who worked hard all their lives. I often reflect on the gifts that they gave to my brother, sister and me as children. The gifts were neither money nor property. Instead, they instilled in us a strong desire to get an education coupled with a fierce determination to succeed at anything we attempted in life.

When my father arrived in America, he had neither schooling nor skills. Somehow he found a job in a small bakery washing baking pans, sweeping the floor and doing other menial chores. Over the years, by watching and asking questions, he learned how to bake and was finally able to open his own bakery.

My mother, also without schooling and skills, found a job in a clothing factory sewing garments. She taught herself how to sew well until she was hired as a seamstress in a ladies’ fashion store. Later, she joined my father in their small bakery and grocery store. My father baked and my mother operated the store.

I cannot recall either of my parents ever being absent from or late to work unless they were so sick that it was almost impossible to rise from their beds. They were thrifty with their earnings, yet provided a clean, decent home and plenty of food for all of us. They showered love and attention on the three of us children. Basically, they lived what they taught us.

As my sister, brother and I enjoyed their love, we somehow picked up their wishes that we obtain a good education and the determination to succeed. My brother became an oral surgeon and my sister received her Bachelor of Arts degree, though late, at age 59. After receiving my Master’s degree in Liberal Arts, I first became a teacher and later a businessman. These are some of the gifts I received from my parents.

Hoping that this article will get us parents thinking about what gifts to give our children, allow me to cite a few. The list may be added to or modified as the reader feels necessary. We, as parents, and society must become aware of the ideals and goals we instill in our children because they will mirror us in a few years! Consider our own parents’ influence on us and how much we think and act as them throughout our lives.

A. I feel that the first and most important ideal to give our children is the following quote:
“The best gift a father can give to his children is to love their mother. And the best gift the mother can give to her children is to love their father.”
Think about why this is so important!

B. The next gift is sound character education, and one of the most important qualities of character education is virtuous behavior. The definition of virtue includes integrity, industry, and responsibility. If our children are not educated about the attributes of character necessary to succeed in life, they will not find happiness.

C. If our young people are going to be successful in meeting the tough challenges facing them in society, we need to instill mutual respect, tolerance, empathy, civility, humility, honesty, and resolution. Space limits the discussion of the above qualities but you already know what they mean if you are displaying good character.

D. Public Service must be taught to our children. We should teach our young people that they can be proud of public service, that it is stimulating and rewarding. Public service can take many forms from elected public office to volunteer service in the community. The active participation of our children in public service will ensure the greatness of our country. They must become interested in the political and social community around them.

E. A sound education must be taught about our alliances. Our children must understand and appreciate that they are citizens of the United States and also citizens of the world. Our children must grasp this relationship and understand their history. If they do not, they will not be able to effectively appreciate or participate in our varying levels of representative government.

Another one of the greatest gifts to give our children is to instill confidence and determination in whatever they attempt to do. Confidence and determination lead to success regardless of the difficulties to be faced.

The above suggestions are merely to jumpstart thinking about our relationships with our children. Your list will have many more, and perhaps will be different from mine, however, if we are diligent in instilling the above ideals in our children they will find their own paths in life easily whether they be in academics or as skilled trades people. What is important is that we carefully consider the gifts we give to our children? Our influence on them is greater than we realize.

Sadly, there is one gift that our government and we parents are giving our children which is unfair and will cause great hardship for years; it is the bestowing of a huge debt (close to $300,000,000.00), on them through no fault of theirs. If we truly value our children, and wish them to have better lives than we have built for ourselves, we have no choice but to stand up, not only for deficit reduction, but for a systematic plan to reduce the burden of debt that we are piling up daily. Today’s parents and grandparents owe it to their children to take care of their own debts. We must not burden our children with our foolish and wasteful ways; they deserve better.

You and I know that we enrich our own lives as we educate our children. From our young people, we refresh our thinking about optimism, enthusiasm, and new ways of looking at old questions. Indeed, from our children, we learn how to scan new horizons. Let us not place the mistakes we have made on their young shoulders. Let them fly free from the nest and seek new goals. When we give them gifts that add to the zest for life, we can rest assured that we have been good parents.

Whatever gifts we give to our children, tell them over and over, “We love your uniqueness. We love you. We want you to grow up to be all that you can be. You don’t have to be like us. You’re bright and creative. You have blessed us by coming. We really love you,” ending with a great bear hug. Isn’t that what you wished your mother and father had said to you but you never heard? What greater gift is there?