Americans are saving less and spending more
- The U.S. Department of Commerce reported personal savings as a percentage of personal disposable income declined from 10% in the 1980s to 1.8% in 2004, and dipped into the negative numbers in 2005, before rising to roughly 2.5% in early 2013.
- Four in 10 Americans don’t have even one month’s income in savings for an emergency. (MSNBC, HSBC Bank, 2007)
- More than 2.1 million Americans with home loans missed at least one payment in a recent year. (Mortgage Bankers Association, 2008)
- In July 2012 balances on credit cards totaled $793 billion, or roughly $15,800 per household. By early 2013 it had risen to over $848 billion. (Federal Reserve Bank, New York)
- The size of total consumer debt grew nearly five-fold from 1980 ($355 billion) to 2001 ($1.7 trillion), and by 2006 it had grown to $2.4 trillion. (Federal Reserve Bank, New York)
- By early 2013 Americans carried roughly $11.28 trillion in consumer debt, which works out to over $7,000 per household. Counting only those who have consumer debt, the average is over $15,000 per household. (Federal Reserve Bank, New York)
- As of the year ending December 2012 there were 1.2 million consumer bankruptcy filings in the United States, including over 840,000 Chapter 7 filings, over 10,300 filings for Chapter 11, and over 360,000 for Chapter 13. (Administrative Office of the U.S. Courts)
College costs are growing
- The published average annual tuition cost for a 4-year college is over $12,000 for an out-of-state student, up from $6,000 a year in 2006/2007. Annual tuition for a private school is over $29,000, according to the College Board and the National Center for Education Statistics.
- In addition, some groups of students are more likely to face unmanageable debt burden after graduation. Fifty-five percent of African-American student borrowers and 58% of Hispanic student borrowers recently graduated with unmanageable debt burden, reports the U.S. Department of Education’s National Center for Education Statistics.
Why do so many American families struggle with their money? A primary factor is that society does not teach people how to successfully manage their money. Most schools do not teach personal financial skills; instead, society emphasizes consumption, spending, and immediate gratification.
- Thirty-six percent of Americans in a recent survey answered fewer than half of the ten questions correctly in a study on financial literacy, and only 12 percent answered nine or more questions correctly. (LIMRA 2013)
Recognizing this crisis, the Foundation provides financial readiness education at little or no cost to a wide variety of organizations across the nation. Military units, community and professional organizations, women’s causes, youth groups, high school students, economically at-risk populations, and religious groups are among the groups benefiting from FCEF’s proven financial readiness curriculum.
The average college graduate in 2013 had over $33,000 in student loans, and roughly two-thirds of graduates had outstanding student loans. This is a heavy burden for these bright, talented students who are just getting started on their financial journey. Scholarships, awarded for academic merit and/or financial need, can motivate recipients to higher levels of achievement and definitely ease the burden of student loans.
- A 22-year old student graduating this year who consolidates a $40,000 loan at 6.125 percent will need to pay $243 a month…until they’re 52! By that time, they will have paid $47,494 in interest alone.
FCEF’s scholarships are developed and granted in partnership with community organizations such as military units, Girl Scouts, Rotary Clubs, public universities, and other youth groups. These partnerships broaden scholarship opportunities for young men and women across the country, regardless of heritage or financial circumstances.