So many options, so little information
Experts are suggesting financial education as a means of long-term national economic stability.
With options like payday loans, credit cards and all kinds of lending sources out there, some analysts are wondering whether financial advice should be part of the effort to repair the economy.
An economist and columnist for the New York Times, Robert Shiller, points out that Americans making bad financial decisions was a big contributor to the economic crisis. The blame game has shifted responsibility between so-called “predatory lenders” and people who took out mortgages and other loans they couldn’t afford.
He suggests that a good step toward preventing another economic crisis is to fund more government programs that help people become financially literate.
Existing programs and efforts
There already are a few government-funded efforts in place geared toward financial education. These include the Office of Financial Education and the Advisory Council on Financial Literacy. Both programs mainly distribute financial education through outreach to schools.
Some states have taken it upon themselves to require financial literacy as a high school graduation requirement. So it appears that efforts are being made to ensure that the next generation will be more financially literate in the future. But what about the current generation? They aren’t going anywhere any time soon. And many of them don’t even understand how payday loans work.
Help for everyone
Shiller suggests that the government should subsidize financial advise because most people get their advise at the same time they are getting a sales pitch. People who took out subprime mortgages relied on the advise of the people who were profiting from those mortgages, and catastrophe ensued.
This is why Shiller suggests that there should be financial advise available from parties that are not involved in financial transactions. With con artists, defrauders and financial predators out there, the government could help keep individuals’ finances stable. This, in turn, would help keep the nation’s finances stable.
More reasons to educate the masses
The Federal Housing Administration is in charge of making sure that mortgage lenders are legit and ethical. However, the FHA admits that it is understaffed and unequipped to screen the high number of lenders who are applying for government approval.
Furthermore, if the government employes financial advisers, that will create jobs and help stimulate the economy. So, in regard to addressing the withering economy, it’s a win-win.
Obama’s economic plan
Barack Obama has said many times that his economic stimulus package is designed to stimulate the economy in the short term as well as build financial stability in the long term. If funding is included to employ public financial advisers, the initiative will achieve both long-term and short-term affects. it will immediately create jobs for those financial advisers, and it will give individuals the tools to ensure their own long-term financial stability.
Educating people about their options, such as teaching them the benefits of using payday loans instead of credit cards, would certainly make for a more financially healthy nation as a whole.
Interesting perspective!
Okay, you can’t obtain a payday loan, default on the loan, break your contract and then call the industry “predatory lending.” That just doesn’t make any sense. The payday loan industry has been a constant target in the media. They have been blamed to be the cause of financial hardships and the cycle of debt that many people are facing throughout the country.
However, they forget to highlight a few “very important” facts. One of the biggest reasons why people are in debt is because they were never responsible with their finances in the first place and continued to ignore their responsibilities… period.