Fed Chief Says Most in U.S. Manage Money Well
By Paul RizzoPayday Loan Writer
While most American households do well when it comes to money management, lower-income families — which generally have less of a financial cushion to deal with unexpected problems — face many challenges, Federal Reserve Chairman Ben Bernanke said Tuesday.
Bernanke observed that families are coping with higher borrowing costs and lofty energy prices in these times.
In addition, U.S. consumers must deal with an array of increasingly complex financial products that seem bewildering when it comes to making smart financial decisions.
"U.S. households overall have been managing their personal finances well. On average, consumer debt burdens appear to be at manageable levels and delinquency rates on personal loans and home loans have been low," Bernanke noted.
The lower-income bracket Bernanke speaks of is the target of payday loan firms, critics of the industry are quick to point out.
While most U.S. households are juggling their financial obligations well, families with lower incomes face greater difficulties with credit card debt, medical bills and more.
"These families generally have less of a cushion to absorb unanticipated expenses or to deal with adverse circumstances, such as the loss of employment or a serious health problem," Bernanke said.
Low income families are significantly less likely to have a checking or savings accounts. Families on the low end of the income spectrum are also were less able than others to manage their debts.
Financial education, encouraging savings and investment, community economic development initiatives and other things can help families of modest means build assets and improve their economic well-being, rather than relying on a payday advance service and other short-term, quick-fix methods of getting by.
Bernanke urged the promotion of financial literacy in schools.
"I served six years on the local school board and one of the issues I was always pressing was to get more economics into the curriculum, including financial literacy. It was always a push," Bernanke recalled.