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Help Fight Financial Illiteracy (Charlott Jones Commentary)

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As individuals and as a country, we are in the throes of a huge problem with consequences for our families, our communities and our entire nation. That problem is financial illiteracy.

Statistics show that the majority of Americans do not understand their finances sufficiently to protect themselves and their families. The average American household owes $7,274 on its credit cards, and many fail to take advantage of a 401(k) or other retirement options offered by their employer. An unexpected crisis could derail them emotionally and financially. Arkansans score at or near the bottom in financial literacy surveys.

In the latest FINRA Investor Education Foundation State-by-State Financial Capability Survey, Arkansans ranked third-worst in financial literacy, fourth-worst in unpaid medical bills and tied for second-worst in making only the minimum payment on their credit cards. The findings for Arkansas included:

  • 37 percent of Arkansans surveyed reported spending less than their income. The national average was 41 percent.
  • 34 percent of Arkansans reported having medical bills that are past due. This compares with 26 percent of respondents nationwide.
  • 58 percent do not have rainy-day savings to cover three months of unanticipated financial emergencies. This compares with 56 percent of Americans nationwide.
  • 34 percent of Arkansans reported using one or more non-bank borrowing methods — payday loans, for example — in the past five years.
  • 41 percent reported paying only the minimum credit card payment during the past year, compared with 34 percent of all Americans.
  • On a test of five basic financial literacy questions, Arkansans on average answered only 2.7 questions correctly. The national average was 2.88 correct answers.

CPAs are uniquely qualified to help solve the problem of financial illiteracy. I challenge every CPA in Arkansas to volunteer to help educate the public on financial topics. The AICPA has created turnkey resources for use by members, and they can be found on the website at AICPA.org. The CPA Financial Literacy Resource Center contains volunteer toolkits that focus on life stages from tweens to retirees and include a PowerPoint presentation with notes and fact sheets. Other resources cover topics such as achieving your financial goals, budgets and credit cards.

CPAs can also make the public aware of the 360 Degrees of Financial Literacy website, 360FinancialLiteracy.org. The AICPA developed this website to help Americans understand their finances and develop money management skills.

One popular feature of the website is Meet the Money Doctors, which is a volunteer panel of qualified CPAs who have attained the Personal Financial Specialist credential. The Money Doctors answer questions from the public regarding their financial planning issues. The program is designed to help and protect consumers by providing guidance on basic financial planning issues.

One of the most successful efforts by the CPA profession in promoting financial literacy is the award-winning Feed the Pig campaign. The AICPA partnered with the Ad Council to launch the Feed the Pig campaign, which is committed to helping adults ages 25-34 adopt positive saving habits for long-term financial stability.

The campaign public service announcements feature the tagline “When it comes to financial stability, don’t get left behind” and highlight the impact of both smart and poor financial behavior. They also direct audiences to FeedthePig.org, an interactive website with free tools and information to help foster positive saving habits.

The Arkansas Society of Certified Public Accountants has resources to help teach children about money. Kids Count is a financial literacy program designed for elementary school students. CPAs receive everything they need to make the presentation. Each teacher receives classroom project information to reinforce the savings lessons and a recommended reading list.

If you are interested in making a Kids Count presentation or being added to the list of ASCPA Financial Literacy Volunteers, contact Robin Harris at the ASCPA office at (501) 664-8739 or RHarris@ARCPA.org.

Charlott A. Jones is a CPA and a tax manager at Jones & Co. Ltd. in Jonesboro. She is the 2014 president of the Arkansas Society of Certified Public Accountants.

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