Wednesday, April 29, 2009 / 09:30 AM - 10:45 AM
The financial markets depend largely on consumer confidence, so the more knowledgeable consumers are about the markets, the better off the markets will be, panelists said.
"We′ve got to fix the system, not the individual," said Sean Cleary of Strategic Concepts.
Among the causes of this financial illiteracy is the increasing complexity of finances over the past century, said Richard Hartnack of US Bancorp.
Fifty years ago, he said, it was difficult to get into huge amounts of debt; a home loan typically came with a fixed rate and lasted 30 years. Today loans are multifaceted. "We need to help people understand how to buy and consume," Hartnack said.
David Simon referred to financial literacy as a sort of "alternative medicine" to help remedy the economic downturn.
"There is a massive amount of greed in a capitalist system. The only way to protect yourself is through financial literacy," moderator John Bryant said. Cleary agreed, saying the only people who succeed in a market economy are those with monetary know-how.
Cleary has teamed up with the U.S. President′s Advisory Council on Financial Literacy to educate South Africans. In the first year, the program reached 7,000 children in schools and 200 in college. The target for the next academic year is 25,000 students.
Beverly Daniel Tatum of Spelman College said most of her students depend on loans for tuition but don′t totally understand the process. A major reason students of color do not graduate from college is because of money rather than academics, she said. "We need a tool kit to help students get through this."
Tatum encourages her students to understand philanthropy. Their tuition is just 46 percent of the actual cost of their education. The remainder is subsidized by donations. "I want my students to understand how to pay it forward," she said.
To reach out to U.S. adults, Charlie Rahilly of Premier Radio Networks uses his media outlets to communicate with consumers and connect them with resources to better understand finances.