March 21, 2003

The Honorable Richard Shelby, Chairman
The Honorable Paul S. Sarbanes, Ranking Member
Senate Banking, Housing, and Urban Affairs Committee
534 Dirksen Senate Office Building
Washington, DC  20510

The Honorable Judd Gregg, Chairman
The Honorable Ted Kennedy, Ranking Member
Senate Committee on Health, Education, Labor & Pensions
428 Dirksen Senate Office Building
Washington, DC  20510

Gentlemen:

The American Association of Family and Consumer Sciences strongly supports S.Res. 48, a resolution designating April 2003 as Financial Literacy for Youth Month.  Financial literacy across the lifespan is a critical issue.  There are reports in the press on a weekly basis describing the lack of financial knowledge of young people and the poor financial decisions of young adults and mid-life citizens. This lack of knowledge often leads to financial problems in later life.  This Association has, from its earliest beginnings, been at the forefront of teaching personal finance and encouraging financial stability.

Despite the critical importance of financial literacy to young people, the average student who graduates from high school lacks basic skills in the management of personal financial affairs. A nationwide survey conducted in 1997 by the Jump$tart Coalition for Personal Financial Literacy examined the financial knowledge of 1,509 12th graders. On average, survey respondents answered only 57 percent of the questions correctly, and only 5 percent of the respondents received a `C' grade or better.   A more recent study conducted in 2001 reveals even more dismal results with only 50 percent of the questions being answered correctly.  Further, the largest growing segment of the population declaring bankruptcy is in the age group 20-25.  (Jump$tart Coalition for Personal Financial Literacy, 2001.)

The Consumer Federation of America and the Cooperative Extension system joined with the Consumer Literacy Consortium to quiz 1700 adults nationwide on a set of consumer skills; the average score was 75% correct but there was a wide variation in knowledge.  (Hogarth, 2002)  One of the glaring tragedies to emerge from the collapse of Enron Corporation is the demise of the financial security of its employees.  ABC News reported that many employees invested their entire 401(k) retirement accounts in the corporation.  This failure to diversify has resulted in many long time employees being essentially bankrupt.  Financial counselors have strongly advised that employees diversity their retirement portfolios, however many employees continue their approach as a result of loyalty to the company.

Evidence would seem, therefore, to point to a lack of understanding of sound financial principles and the significant consequences of the lack of that knowledge.  Family financial failures have both personal and societal costs.  Certainly the additional stress on family members and family relationships is detrimental to overall health.  And, there is a correlation between family violence and family stresses such as financial problems.

In these times of economic stress, it is critical to raise the awareness of financial literacy across the entire lifespan.  This Association’s membership fully supports this S.Res. 48 and urges you to pass this resolution expeditiously.

Sincerely,

Sharon Y. Nickols, President			Karen S. Tucker, CAE	
American Association of 			Executive Director
    Family and Consumer Sciences and	American Association of Family 
Dean, College of Family and 			     and Consumer Sciences
    Consumer Sciences
University of Georgia

     

The American Association of Family and Consumer Sciences, Alexandria, VA, is the comprehensive, integrative source of knowledge and the primary voice for individual, family, and community well-being internationally. AAFCS, a 501 (c) (3) not-for-profit organization, is the only organization uniting, educating, and promoting professionals in all family and consumer sciences areas, including consumer retailing; food and nutrition; individual, family and community development; consumer and family education; apparel and textiles; health and human development; and family resource management.