News Release

Contact Information

FOR IMMEDIATE RELEASE April 23, 2003

Contact Rebecca Reid at 202-342-2922

April: Financial Literacy Month,

Kids Need to Know It All Adds Up

WASHINGTON, D.C. (April 23, 2003) Anyone who has worked on financial issues related to teenagers or young adults has learned some alarming facts. For example, young adults are the fastest growing and largest category of bankruptcies in the U.S. Equally disturbing, a national “financial literacy test” survey of high school seniors found that, with the exception of those enrolled in a personal finance class, not one senior passed.

As chairperson of Americans for Consumer Education and Competition, an advocacy group fostering consumer education and financial literacy, and as a former Congresswoman who served on the House Budget and Education Committee, those kinds of statistics say one thing to me: young people have to be educated at an early age about how to become financially responsible adults. Since April is Financial Literacy Month, it’s obvious that now is a good time to stress the basics of how to handle money. To avoid financial pitfalls, young people must be taught the importance of developing a realistic budget and then tracking their money. And one of the best tools to aid in both of these goals is the prudent usage of a debit card.

As debit cards have become more widely used and accepted, I’ve been impressed with their ability to help people stay on track budget-wise. Since purchases are paid directly from a checking account, a person can only spend what he or she has; debts aren’t accumulated that have to be repaid later.

That’s what makes the debit card such a useful budgeting tool. Just as a person would when he or she writes a check, debit card purchases are tracked in a checkbook register. There’s an immediate record of what’s been spent, and how much money is left. By keeping this daily record, debit cards make consumers much more conscious of how much they’ve bought and what it was spent on. Impulse buys tend to be inhibited because a person knows that once the money is spent, it’s gone.

Another advantage debit cards offer is a degree of security. Using a debit card for everyday purchases means people don’t have to carry as much cash. After all, anyone can spend lost or stolen cash, but if a debit card is lost or stolen, the consumer is generally protected against fraudulent use. However, since policies vary among financial institutions, be sure to check with the one that issued the card to understand its policies.

Debit cards are also an excellent way for a person who is new to budgets to learn how to stick to one. Since the debit card is tied to a person’s checking account, it helps enforce the daily routine of tracking where and how money is spent. This day-to-day discipline will pay off later as a person becomes more sophisticated financially. By learning early on how to track spending and adhere to a budget, a person will more easily recognize his or her limits when using credit cards and applying for loans.

Although debit cards are only one tool toward acquiring financial responsibility, they offer a great way to learn sensible budgeting habits, tracking skills and the discipline to spend money wisely. The bottom line is that you can only spend what you’ve got with debit cards, which will help lots of people stay out of debt. ACEC’s web site at www.acecusa.org has all the facts.

As Financial Literacy Month draws to a close, it’s important to keep in mind that helping teenagers and young adults learn about personal finances isn’t something we do just in April, but an ongoing effort – one that adds up all year long.

Susan Molinari
Chairperson
Americans for Consumer Education and Competition

Note to Editors: For more information, or to arrange an interview with Susan Molinari, contact Rebecca Reid reidconsulting@comcast.net or call 202-342-2922.