For
Immediate Release
April 7, 2005
Contact:
Becky Fleischauer, 202-220-2360; bfleischauer@nw.org
Financial Fitness Month Brings A Host of New Challenges
for
American Consumers
(Washington, D.C.) – “Americans can’t afford to take financial literacy and money management skills for granted,” said Kenneth Wade, CEO of Neighborhood Reinvestment Corporation in honor of April financial fitness month. Wade encouraged consumers to test their financial fitness by taking a short quiz and looking into attending local financial education courses. Click here. [PDF]
Current political and economic policies make increasing financial literacy imperative. The passage of the new bankruptcy bill and the prospect of social security being privatized place unprecedented responsibility on individual consumers. In addition, personal debt is at an all-time high. Mortgage and loan products are becoming increasingly complex and risky. And stubborn homeownership and wealth gaps persist. “Without access to quality information and guidance, many consumers miss opportunities to get the most of their investment or worse, fall into mortgage or loan traps that eventually lead to foreclosure and financial ruin,” said Wade.
Wade has committed to tripling the number of homeownership and financial educators and counselors to serve almost two million individuals each year by 2007. NeighborWorks is the nation’s largest certifier of homeownership and financial educators. The next NeighborWorks Training Institute is April 18-22 in Minneapolis, Minnesota.
Research shows that face-to-face, customized financial education and counseling produces the most effective results with consumers. “There is a glut of online personal finance material and advice and plenty of marketing,” said Wade. “Consumers benefit most when counseling and education comes from a trusted source who is able to customize the information to meet each individual’s unique financial needs.”
Recent polls and other research show a troubling number of misconceptions and assumptions regarding personal finances and a trend toward risky debt:
• Almost half of consumers questioned in the Consumer Federation of America and Fair Isaac survey didn't know that increasing one's income will not increase one's credit score.
• The majority – 66 percent – of high school students flunked a basic economic literacy test. Among adults taking the same test, only one-third achieved a score of a C or better, and nearly half – 49 percent – failed. (Securities and Exchange Commission)
• The Economic Policy Institute reports that the personal savings rate for Americans (consisting of contributions to individual savings accounts as well as employer and personal contributions to 401K, IRA and similar pension plans) has declined steadily since the 1970s.
• More than 25 percent of US households have zero net worth. (Economic Policy Institute).
• Studies by Freddie Mac and Fannie Mae reveal that high percentages of consumers believe you have to have a perfect credit score and large down payment to buy a home.
About NeighborWorks
The NeighborWorks network is a nationwide network of more than 235 community development organizations working in nearly 2,700 urban, suburban and rural communities across America. These organizations engage in revitalization strategies that strengthen communities and transform lives. Neighborhood Reinvestment Corporation provides financial support, technical assistance and training for the NeighborWorks network. In the last five years alone, NeighborWorks organizations have generated more than $8.5 billion in reinvestment and helped more than 500,000 families of modest means purchase or improve their homes or secure safe, decent rental or mutual housing.
