President Bush announced last week the creation of the Advisory Council on Financial Literacy
More information is available on the White House web page:
http://www.whitehouse.gov/news/releases/2008/01/20080122-7.html
Operating under the guidance of the U.S. Treasury Department with the specific charge of keeping America competitive and assisting citizens in understanding and addressing financial matters, the 19-member council will focus exclusively on economic empowerment issues. Their duties will include advising the president and Treasury Secretary on such goals as improving financial education efforts for students and adults in the workplace, and establishing effective measures of
national financial literacy, and promoting effective access to financial
services, especially for those without access to such services.
This is a very important step. Financial literacy is sorely lacking in this country and it is urgent to address this issue. The hope is that the council will get to work right away!
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I am also a 30 year Professor of Accounting and Taxation as well as a CPA practitioner. The problem lies not in the instruction of FL, but it lies in the cognitive effect of this FL education. The 2006 Jump$tart Coalition survey found that FL education was not working. "Memorize, regurgitate, and forget" is the problem today wiht eduaction because we are overlooking the need to help the students and adults fully "Understand" FL. This can bve done with the technology that we currently have.
I am trying to find a measure of financial literacy for use with managers in our health care organisation. It seems this isn't a topic routinely researched in health (despite huge budgets). I was wondering if you were familiar with any that could be used in a business context?
The President's Advisory Council on Financial Literacy has 4 MBA's, 4 others with Ph D's or degrees in Finance. They should know that the method of calculating the Annual Percentage Rate is the simple-interest, Nominal APR adopted in Truth in Lending Act of 1968. The mathematically-true APR is the compounded, Effective APR. A loan of $400 for 16 days with $120 interst has a NAPR of 684%, but a EAPR of 39,650%. PACFL shold recommend a change to the EAPR.
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