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INSIDE THE FLX: Troubling trend exposed when it comes to financial literacy (podcast)

Earlier this year, WalletHub released survey results, which painted a grim picture about financial literacy across the U.S.

Stunningly, the U.S. ended 2017 with $92.2 billion in new credit card debt – the highest increase since 2007 – before the ‘Great Recession’.

How much have we learned in the last 10 years; and what are we doing today to prevent making the same mistakes when it comes to personal finance?

Not a lot apparently.

WalletHub noted in their survey that only two in five adults actually have a budget. Another concerning note about that credit card debt? For the first time ever, total American credit card debt has passed $1 trillion.

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WalletHub analyzed financial-education programs and consumer habits — combined with the results of WalletHub’s proprietary WalletLiteracy Survey — in each of the 50 states and the District of Columbia. The data set of 15 key metrics ranges from high-school financial literacy grade to share of adults with rainy-day funds, as well as credit score.

It inspired a local conversation on Inside the FLX. Generations Bank CEO Menzo Case said the prognosis wasn’t very positive, but noted that change was possible if individuals took steps to plan, prepare, and follow-through with personal goals.

He also wasn’t specifically impressed with New York ranking 11th on the list, which was a fair place to sit – given how the state typically performs in national comparisons.

“I think Millennials are doing a much better job than many say. They’re saving money and putting it in current savings, which is really important,” explained Case during his appearance on Inside the FLX. “I think, frankly, the middle-aged [population] from about 30- to 60-years-old are [often] ill-prepared.”

He says that the group didn’t transition well from pension plan to 401K – to prepare themselves for retirement. Case notes that it has put a strain on personal finance for a large chunk of that group.

Case notes that turning the corner on personal finance can be as simple as creating a plan. “I’ve counseled a lot of families, and they really don’t know where the money goes; so that’s the first place to start,” he explained.

It means writing down every single expense. Getting the dollars-and-cents on paper can really help set the stage for what needs to happen next. The banking vet says the next step is understanding debt. “We’re not really shopping for debt like we should. It’s more ‘What will my payment be?’ And less understanding rates, how it fits with a budget, etc.”

Things like pay day lending, which have become major money makers in the lending industry – have capitalized on this ill-informed consumer. It’s something that Case says doesn’t bode well for consumers, or those in the banking industry outside that space. This market is fueled by excessive interest rates, in which uneducated borrowers get hit hard – and are set up for failure.

As for the notion that banks are benefiting from the financially-illiterate – Case says Generations takes every step possible to avoid getting into that space. “Unfortunately, many institutions have learned to live off of overdraft programs. They’re making a lot of money on those programs.” He added that for any bank, having a strong, stable consumer base, who is well-educated on finance is more important and beneficial to all parties involved.

“A nice checking account, good loan savings – are all better,” he continued. “It means the real money, can not only stay local, but then also be invested locally in the community. Stable funds and a stable community are crucial,” he added.

As for his long-term outlook – he said the average consumer would receive a ‘C’ grade on personal finance if they were in school, where he believes more emphasis needs to be put on these types of things – particularly the importance of saving and having a positive relationship with personal finance. “It should start around the 3rd grade,” he explained. “I’m not sure how you reach older consumers, but it’s definitely part of the equation,” he concluded.

READ MORE: The WalletHub survey on Financial Literacy across the U.S.

Inside the FLX is a weekly program featuring conversations with local, regional, and state newsmakers on FingerLakes1.com, FingerLakes1.TV, and FL1 Radio. Hosted by FingerLakes1.com, Inc. News Director Josh Durso – the program was launched in 2015, and features more than 150 episodes, which are available on FingerLakes1.TV, the FingerLakes1.com YouTube Channel, and as a podcast on iTunes, Google Play, and Spotify (coming soon).  Follow Inside the FLX host Josh Durso (@FLXJosh) on Twitter for the latest out of the FingerLakes1.com Newsroom. 

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