RBJ: Financial Education is Consumer Protection

By STEPHEN MARTIN

 

The new credit card law and the proposed Consumer Financial Protection Agency will affect the use of certain financial products but will not fully address the underlying issue that many believe led to the financial crisis: our nation's failing grade in financial literacy. Regulation alone will not cure Americans' financial troubles.

 

It's no secret that many people enter adulthood with little knowledge of personal finance or experience in managing a budget or a bank account. In fact, 73.9 percent of students received a failing grade on a test of personal finance knowledge administered by the Jump$tart Coalition in 2008. This same survey found that one-quarter of high school seniors do not have a bank account.

 

While many young people are not financially literate, they are very interested in increasing their knowledge of savings accounts, credit cards and other financial products, according to a 2008 Student Monitor survey. Canandaigua National Bank & Trust, along with 7,500 other banks throughout the country, will help answer young adults' call for more financial knowledge by again participating in Get Smart About Credit Day during the month of October.

 

As a society, we can't ignore the lack of financial education or protect our children from the inevitable financial responsibilities they will assume. But the recent Credit Card Accountability, Responsibility and Disclosure Act does just that. Under the CARD Act, consumers younger than 21 will need a co-signer or proof of ability to repay. This will delay taking responsibility for their credit decisions for many students, but not permanently. Without financial education, there will be a generation of young adults with no practical credit experience or understanding.

 

We believe that education is consumer protection. Each October and throughout the year, we put this belief into action by teaching financial education in our community. To prepare young adults for the responsibility of credit, whether it is a credit card, car loan or mortgage, we focus on the fundamentals of wise credit use: Don't borrow more than you can afford to repay; always pay on time; and keep a budget to ensure that saving is in balance with spending.

 

Poor budgeting skills and savings habits lead to financial troubles. To make a difference, financial education must be taught in schools and at home and continued in the workplace. We need to address the fundamental issues preventing Americans from achieving financial ability.

 

We understand the importance of financial education, and we commend those in our community who work every day to educate consumers on how to make smart financial decisions.