By Guest Columnist JENNER WOOD, chairman, president and CEO of SunTrust Bank – Atlanta/Georgia
In Georgia, 59 percent of individuals lack a rainy day fund to cover expenses for three months; 19 percent of households spent more than their income over the past year; and 38 percent of those with credit cards paid only the minimum during some months in the last year.
These are just a few of the Financial Industry Regulatory Authority’s (FINRA) findings from its 2013 state-by-state financial capability survey.
The results demonstrate the continued need for a conversation about financial education, how it can help people improve their lives and the best way to deliver educational resources to Georgians.
When studies like this surface, they are easy to discount and ignore. Readers often assign responsibility, rightfully or not, to the usual suspects: the family who charged their vacation and could not pay it off; schools that failed to teach personal finance skills; the culture at large that encourages excessive consumption; or an economy that has taken a toll on pocketbooks. Regardless of where the blame gets placed, it is often an excuse for inaction.
What needs to happen is a shift from blame to solutions. Poor financial decisions are often caused by a lack of information. The vacationer who understands the concept of compounding interest is less likely to use a credit card recklessly. The young person who knows the mechanics of personal budgeting is in a much better position to live within his or her means.
Breadwinners who know they can automatically transfer a portion of their paycheck into savings will find it easier to put money in a rainy day fund. Every person is faced with unique circumstances; the role of financial education is to expose people to resources and tools they can match to their individual situation.
The shift away from excuses and toward solutions is already underway in Georgia, led by strong partnerships between the nonprofit and business communities.
Next month, the Junior Achievement, Chick-fil-A Foundation Discovery Center, housed at the Georgia World Congress Center, will open two venues, JA Finance Park and JA BizTown. These programs will offer hands-on assignments that will help students gain a foundation of knowledge on everyday financial and economic matters. SunTrust and other Atlanta businesses are supporting the program, which will reach approximately 30,000 middle school students annually at Atlanta Public Schools, DeKalb County Schools and Fulton County Schools.
In addition, last year the HOPE Financial Dignity Center at Ebenezer Church, located on the campus of the King Center, opened its doors and is already providing classes on starting a business, buying a home, understanding credit scores and many other topics. Operation HOPE is a global financial education nonprofit that is focused on providing underserved populations with resources they need to succeed in a competitive, free-market economy. SunTrust and the SunTrust Foundation have provided $2 million in cash and in-kind support to Operation HOPE, and other businesses gave to the center as well, including Coca-Cola, State Farm Insurance and more.
What the business and nonprofit communities must do moving forward is ensure that the momentum building around the issue of financial education continues. The economic recovery will bring back jobs and higher pay, but the underlying need to help people navigate their finances successfully will remain. The old assumption that poor money management can always be solved by a better economy tomorrow is no longer tenable.
If education is the tool, financial well-being is the goal. Georgians want to spend less time worrying about money and more time focused on their family, career or other passions. When people are achieving their financial goals, other priorities can get the attention and energy they deserve.
The 2013 FINRA study is a sobering reminder that many people have yet to achieve a sense of financial well-being. As a state, we are just now starting to tackle this issue head-on. Turning the proverbial ship around will require patience and perseverance, but the goal is worth pursuing, and success or failure in reaching it will impact this state – positively or negatively – for decades to come.