The White House recently declared April to be financial literacy month and called upon Americans to boost their understanding of their personal finances. TSCPA and AICPA have been promoting financial literacy for several years as a public service project to help the public better understand how to manage their financial affairs and plan for the future. TSCPA hosts a great website, www.valueyourmoney.org, and we also provide other free information and communications to help promote financial literacy to the public.
I am happy that the government is promoting the benefits of financial management to the public. But I find it quite ironic that a federal government that is now over $14 trillion in debt is counseling its citizens to better manage their financial affairs. I guess the idea of demonstrating the benefits of proper financial management through actual action on their part never dawned on our political leaders. It’s the classic – do as I say, not as I do – scenario.
More than six years ago, TSCPA pushed our elected leaders to work toward solving the impending problems facing our largest entitlement programs – Social Security and Medicare. We produced a white paper to lay out the details of the problem and to encourage action to avert an even bigger problem down the road for our children. We didn’t recommend a specific solution, as there are various approaches that can be used. Our call was just – get together as policy-makers and come up with a solution before the problem gets even bigger. Unfortunately for the country, nothing has been done during the intervening years, and these programs have continued to grow and the problem just keeps getting bigger.
I continue to be amazed that there are people – political figures, pundits and others – who claim that there is no problem with Social Security or it is really a simple fix. Really? If it was simple, then why haven’t we fixed it? The last time I checked, most people go ahead and solve simple problems. It’s the complex ones they take a little more time on. And the folks who claim there is no problem, that the Social Security Trust Fund is fine for another 30-40 years and the securities it is holding are backed by the full faith and credit of the U.S. government, exactly how do you envision a government that is $14 trillion in debt paying that tab?
On the positive side, members of the public started to recognize they had a problem with finances several years ago and have changed their behavior. A few years ago, the personal savings rate in the U.S. had dropped to near zero and at one point was actually negative. Today, the personal savings rate has been hovering around 6 percent for the past year. Basically when people are feeling good about their personal situation, they spend more. When they are worried about their future, they save more. Sad for us our elected leaders do not seem to operate under these same impulses.