WASHINGTON -- Michelle Singletary, "The Color of Money" personal finance columnist for The Washington Post, used her life experiences to illustrate for credit unions that financial education should be personal.
She noted that former Treasury Secretary Paul O'Neill had said that financial education starts in the schools and though she agrees that more needs to be done at school, Singletary said it really needs to begin at home. She read from one of her books, Spend Well, Live Rich, a passage about Big Mama, her grandmother, who taught her about saving and the differences between needs and wants.
Singletary read about how she and her four brothers and sisters would go out with Big Mama, who raised them, on Friday nights to hunt down her alcoholic grandfather before he spent his entire week's pay. She explained how her grandmother always "paid herself" by depositing money in her credit union savings before paying anything else. According to Big Mama, "The reason you need a rainy day fund is because it always rains," she said.
"Financial literacy starts with financial integrity," Singletary said, which means only doing what you can afford because no one can keep up with the Jones'.
"Financial literacy is also about financial freedom," she said. According to Singletary, the only thing worth borrowing for is a home. The average household, she said, has $9,200 in credit card debt. Those who seek credit counseling have charged up an average of $15,700 and have an average annual salary of just $30,000. Studies have shown that even those who pay their debt off every month tend to spend 30-40% more than if they had paid cash.
"When it comes to your money, you need to sweat the small stuff," she advised, because it all adds up.
If credit unions truly want to boost financial literacy, they need to look internally first. "How can you preach the message if you're not practicing it? It has to start with you." She explained how she started a group called Prosperity Partners at her church that meets once a month where senior partners, just some women with better financial sense, pair with junior partners, who need a little nudge to get on the right path. --firstname.lastname@example.org