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!