During a Global Pandemic, Financial Literacy is Must

By Judith Corprew

With the recent staggering unemployment numbers, extreme stock market fluctuations, and potentially dire economic consequences as a result of the coronavirus pandemic, many people are naturally concerned about their own financial security and how to plan-ahead for what’s next.

During this period of uncertainty –even panic – being capable of addressing financial decisions in a thoughtful and prudent way, for your own future and your family, is critical. If the last few weeks have taught us anything, it’s how very relevant this can be in an emergency as well as the long-term.

Many who followed the stock market in recent weeks might feel they have been riding the roller coaster at nearby Rye Playland amusement park.

Working with local community college students, recently returning military and community non-profits to offer lessons about how budgeting and financing works, has a meaningful impact on all our lives and may help people make the prudent decisions that will get them through the crisis and beyond.

Such important decisions, such as taking out and repaying student loans, effective savings and investing for retirement, use of credit cards, when it is the right time to start a new business, buy a new car or perhaps that dream home, will determine life-long financial health.

When any individual walks into a store and sees something they want, financial literacy skills help allow them to recognize that the item they desire might cost 20 or perhaps 50 hours of labor, after also paying income taxes.

More people than ever are burdened with massive student loan debt. In fact, 69% of the college class of 2019 graduated with debt, averaging $29,900 in student loans . In the country as a whole, 45 million borrowers collectively owe close to $1.6 trillion in student loans.

It was announced in February that total United States credit card debt has reached a new high of nearly $1.1 trillion. While that number seems large, it is still about $400 billion less than student loan debt.

All this data shows the real impact of educating younger people to make informed financial decisions, especially preparing for future emergencies in their lives, a useful lesson right now.

A current important federal initiative is lending and support of small businesses, the lifeblood of our local economy and of job creation. As a Small Business Administration (SBA) lender, this is very much about supporting the dreams and innovations of brave and talented entrepreneurs.

The federal government enacted a $2 trillion stimulus, its largest ever, to help boost the economy as restaurants, retailers and other businesses have suffered enormous financial damage due to restrictions related to coronavirus. This also raises the question - how many Americans can be financially secure in a crisis or, in this case, a pandemic?

Financial literacy lessons suggest three to six months wages and living expenses should be tucked into an emergency account, yet according to a Bankrate study, only 40% of Americans would be able to pay an unexpected $1,000 expense, like an emergency room visit, veterinary visit or a car repair. More than a third would have to borrow from credit cards, a personal loan, a family member or friend.

As a society, we need to place a higher priority on providing not only youth, but people of all ages, with a stronger financial literacy skill set that will help prepare us to manage our debt, plan for the future, and stay safe during emergencies.

Judith Corprew is Executive Vice President – Chief Compliance & Risk Officer at Patriot Bank, with locations in New York and Connecticut