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Financial Education
Thank you so much for visiting this site, and for your interest in financial education. I am currently working to pass major legislation that will ramp up financial and economic education efforts for students and adults. As part of that effort, I have worked to bring together resources and information on this page to help Washingtonians access financial education efforts locally, learn more about financial basics, and find out about the importance of bringing personal finance lessons into the classroom.
The Need
Unfortunately, one of the many reasons our country has fallen into the current economic recession is that too many Americans made uninformed and risky financial decisions. In order to avoid another devastating economic crisis, we are going to have to work to ensure that more Americans have the skills they need to make financially sound decisions.
My Bill
My bi-partisan bill, The Financial and Economic Literacy Improvement Act of 2009, will provide $250 million in grants annually to states to support teaching financial literacy in grades K-12 and at 2-and 4-year colleges.
Bill Summary | Floor Statement - Video | Audio
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Did You Know?
- One-third of college students have four credit cards when they graduate.
- More than half of graduates have piled up $5,000 each in high-interest debt.
- The number of 18- to 24-year-olds who have declared bankruptcy has almost doubled in 10 years.
- One in three adults have no savings, and among those between the ages of 18 and 34, almost half have no savings.
- 28% of Americans in a recent said their mortgage terms turned out to be different than they expected.
- One in three Americans don't put any of their income towards retirement.
- 57 percent of Americans do not have a budget.
- One in four adults do not pay all their bills on time.
- Even though it's free, two-thirds of adults have not ordered a copy of their credit report in the last year.
Sources:
Harris Poll 2009 Financial Literacy Poll
McClatchy Newspapers 3/15/09
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Where You Can Get Financial Literacy Skills Today
- Washington State Department of Financial Institutions - Financial Education Calendar
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Washington State Financial Literacy Leaders Speak on the Need for Senator Murray's Bill
Pam Whalley, Director of the Center
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Senator Murray discusses her bill with Pam Whalley. |
“If not now, when? When will we provide our children with the tools they need to take control of their financial lives? The need could not be more apparent. When all is said and done, financial illiteracy is one of the root causes of our current financial crisis, yet financial education has been disappearing from our schools. Senator Murray’s bill will help us begin constructing a firm foundation of financial knowledge in elementary school, building on this foundation as our children mature, so that by the time they graduate, they will have the skills they need to take control of their financial lives.”
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Don Ide, Financial Education Teacher at Lynwood High School:
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Don Ide illustrates the amount of fine print in many financial agreements in his classroom with Senator Murray |
“Even with our current economic situation, our economic system is the envy of the entire world. Credit is one of the most wonderful tools we have in our economy. All citizens need to learn how to use credit wisely. Wise use of credit will help you countless times in the future and enhance your life. Foolish use of credit can ruin your life and make you miserable.
“It is exciting to see the Federal Government initiate legislation to improve the financial literacy for all Americans. We take so much of our economic system for granted, but without proper instruction, our economic system is no better than our least knowledgeable citizen. We need to teach our youth how to thrive in our economic system through financial literacy.”
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Financial Education Basics
Below are a some key financial terms that you need to know. For an explanation of more financial terms and concepts see this Glossary of Terms.
401(K) plan — A tax-deferred investment and savings plan that serves as a personal retirement fund for employees.
Annual Percentage Rate (APR) — The cost of credit on a yearly basis expressed as a percentage.
Annuity — A series of equal payments made at regular intervals, with interest compounded at a specified rate.
Appreciation — An increase in the value or price.
Balance — The amount owed on a loan or credit card or the amount in a savings or investment account.
Bankruptcy — A legal proceeding declaring that an individual is unable to pay debts. Chapters 7 and 13 of the federal bankruptcy code govern personal bankruptcy.
Capital — A person's savings and other assets, which can be used as collateral for loans.
Central bank — The principal monetary authority of a nation, which performs several key functions, including issuing currency and regulating the supply of credit in the economy. The Federal Reserve is the central bank of the United States.
Collateral — Property that is offered to secure a loan or other credit and that becomes subject to seizure on default. (Also called security)
Compound interest — Interest that is calculated on the original principal plus all interest accrued to that point in time. Since interest is paid on interest as well as the amount borrowed, the effective interest rate is greater than the nominal interest rate. The compound interest rate method is often used by banks and savings institutions in determining interest they pay on savings deposits "loaned" to the institutions by the depositors.
Cosigner — A term referring to a person, other than the principal borrower, who signs for a loan. The cosigner(s) assumes equal liability for the loan.
Federal Deposit Insurance Corporation (FDIC) — An independent deposit insurance agency created by Congress in 1933 to maintain stability and public confidence in the nation's banking system. The FDIC promotes safety and soundness of insured depository institutions and the U.S. financial system by identifying, monitoring and addressing risks to the deposit insurance funds; minimizes disruptive effects from the failure of banks and savings associations; and ensures fairness in the sale of financial products and the provision of financial services.
Federal Reserve Bank — One of the 12 operating arms of the Federal Reserve System, located throughout the nation, that together with their 25 branches carry out various System functions, including operating a nationwide payments system, distributing the nation's currency and coin, supervising and regulating member banks and bank holding companies and serving as banker for the U.S. Treasury.
Finance charge — The total dollar amount paid to get credit.
Fixed rate — A traditional approach to determining the finance charge payable on an extension of credit. A predetermined and certain rate of interest is applied to the principal.
Foreclosure — The legal process used to force the payment of debt secured by collateral whereby the property is sold to satisfy the debt.
Inflation — A sustained increase in the general price level or a decline in the value or purchasing power of money.
Interest — A fee for the use of money over time. It is an expense to the borrower and revenue to the lender. Also money earned on a savings account.
Lien — A creditor's claim against a property, which may entitle the creditor to seize the property if a debt is not repaid.
Liquidity — Quality that makes an asset easily convertible into cash with relatively little loss of value in the conversion process. Sometimes used more broadly to encompass credit in hand and promises of credit to meet needs for cash.
Mortgage Loan — A temporary and conditional pledge of property to a creditor as security for the repayment of debt.
Predatory lending — Targeting loans to elderly, low-income and other people to take advantage of their financial status or lack of financial knowledge.
Principal — The unpaid balance on a loan, not including interest; the amount of money invested.
Recession — A significant decline in general economic activity extending over a period of time. Usually declared after two consecutive quarters of declining gross domestic products.
Securities — Paper certificates (definitive securities) or electronic records (book-entry securities) evidencing ownership of equity (stocks) or debt obligations (bonds).
Subprime Lending — Lending provided to those who do not qualify for "prime" rates, those rates reserved for borrowers with virtually blemish-free credit histories. Subprime lending that involves unscrupulous practices is considered predatory.
Treasury — The executive department of a government in charge of the collection, management, and expenditure of the public revenue.
Unemployment rate — The percentage of the labor force that is unemployed and actively seeking a job.
Variable rate — A variable-rate agreement, as distinguished from a fixed-rate agreement, calls for an interest rate that may fluctuate over the life of the loan. The rate is often tied to an index that reflects changes in market rates of interest. A fluctuation in the rate causes changes in either the payments or the length of the loan term. Limits are often placed on the degree to which the interest rate or the payments can vary.
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Financial Education Tools and Resources Online
Home Ownership
Help with Buying and Owning a Home in Washington State – Find local homebuyer seminars, help for those considering refinancing, access to housing counseling for anyone facing foreclosure.
Mortgage Comparison Calendar - designed to help you compare the monthly payments and the amount of equity you will build in your home for several kinds of fixed and adjustable-rate mortgages.
Taxes
Understanding Taxes - Who qualifies as a dependent? What is an exemption? How do you report interest from a Form 1099? These 14 tax tutorials will guide you through the basics of tax preparation, giving you the background you need to electronically file your tax return.
Washington State Sales Tax Deduction – Learn more about how to deduct your Washington state sales tax on your federal tax returns. I have worked to ensure that Washington state residents have access to this critical deduction that allows families to put money back in their pockets at the end of each tax year.
Avoiding Scams
Avoiding Predatory Lending – Helpful information from the Washington State Department of Financial institutions on avoiding predatory lending schemes.
Washington State Financial Fraud Alerts – Make sure that you are aware of scams that could threaten your money.
Credit
Help Repairing Your Credit – How to fix negative information on your credit report, avoid scams and information on your rights regarding credit repair.
Credit Card Payment Calculator - Calculate ideal monthly credit card payments.
Your Money
Checking Account and ATM Basics – Step-by-step instruction on opening and maintaining a checking account, tips on ATM fees and debit cards, ways to avoid over drafting your account and account privacy information.
Tips to Save Money – Ways to save money on housing, transportation, insurance and more.
Build a Household Budget Worksheet – Track your projected and actual expenses each month with this handy worksheet.
Recursos Españoles
En español - Para obtener más información financiera haz click aquí.
Other Helpful Web Sites
Washington State Department of Financial Institutions
The U.S. Treasury’s Office of Financial Education