Monthly Archives: December 2018

U.S. Financial Health Pulse

Posted on December 29, 2018 by Melissa Hart

Despite a strong economy, millions of Americans face financial struggles. These difficulties include lower household net worth, increased loan defaults, and high levels of credit card debt. These are the findings in the recent report, U.S. Financial Health Pulse, published by the Center for Financial Services Innovation (CFSI), in partnership with Omidyar Network, the Metlife Foundation, and AARP.

The report assesses various financial health indicators that include income, bill payment, spending, saving, debt load, insurance, retirement planning and credit scores. When combined, these factors provide a composite view of the spending, saving, borrowing, and financial planning activities of Americans.

Some of the findings of the 2018 baseline report include:

17 percent of American are viewed as financially vulnerable, 55 percent financially coping, and 28 percent financially healthy.
47 percent of respondents reported spending that equals or exceeds their income.
36 percent are unable to pay all of their bills on time.
30 percent say they have more debt than is manageable.

U.S. Financial Health Pulse is intended to guide financial institutions, government agencies, and community organization in developing educational programs and financial products to better serve the needs of Americans. This study will be conducted each year to determine changes in America’s financial health.

For additional information on U.S. Financial Health Pulse and to view the report, click here.

Teaching Suggestions

Have students talk to friends to determine which of the financial health indicators they believe to be most important.
Have students create a survey instrument to measure various financial health indicators.

Discussion Questions

What are the benefits of measuring financial health in our society?
Describe actions that might be taken by business, government, and community organizations to address the financial difficulties faced by people.

Categories: Chapter 1, Chapter 2, Financial Planning | Tags: Financial Planning, wise money management | Leave a comment

GIG Economy Retirement Planning

Posted on December 15, 2018 by Melissa Hart

As more and more people work as freelancers, independent contractors, and sharing economy workers, concerns grow regarding retirement for this group. A recent study revealed that very few full-time gig economy workers have an adequate retirement plan. Relying on Social Security is probably not enough since those funds will not likely cover retirement living expenses.

Most gig economy workers are one-person businesses, many with limited financial literacy. As a result, they do not properly plan for retirement savings. Self-employed individuals also face the challenge of volatile income streams. And, they lack employer-provided benefits, such as health and disability insurance, unemployment benefits, and paid time off. In addition, these gig economy workers are responsible for paying 100 percent of their Social Security and Medicare taxes through self-employment tax.

Some advantages of gig economy workers are:

deducting most business-related expenses, reducing their taxable income.
access to Simplified Employee Pensions (SEPs) that allow self-employed people to contribute to a tax-deferred retirement fund.
the ability to supplement their retirement income as they may continue to work part-time with customers and clients in their later years.

While gig workers face several financial challenges, programs are surfacing to help the self-employed save for retirement and achieve better long-term financial security. These include:

Open Multiple Employer Plans (MEPs) or Pooled Employer Plans (PEPs) that let employers combine resources for independent workers to purchase group health and disability insurance.
A proposed Portable Benefits for Independent Workers Pilot Program Act to establish a fund through the U.S. Department of Labor.
Several states are creating automatic-enrollment IRAs involving government-facilitated programs administered by private financial firms.

For additional information on retirement planning in the gig economy, go to:

Teaching Suggestions

Have students talk to a freelancer or independent contractor to obtain information about their financial planning activities.
Have students create a financial plan with recommendations for a freelancer or independent contractor.

Discussion Questions

What do you believe are the benefits and drawbacks for gig economy workers?
Describe actions you would recommend to self-employed individuals for improved personal financial security.

Categories: Chapter 1, Chapter_14, Financial Planning, Retirement Planning | Tags: Financial Planning, retirement planning | Leave a comment

Why Buy When You Can Rent?

Posted on December 8, 2018 by Melissa Hart

While car ownership has been a cultural milestone in our society, this tradition is diminishing with a trend toward renting or borrowing rather than owning. This situation is partially related to fewer teenagers opting to obtain a driver’s license. Also, fewer young people are buying homes, giving preference to the flexibility of renting.

The owning of “stuff” is shifting toward “decluttering” and choosing instead to rent items as needed. A strong belief that overconsumption is putting our planet at risk is driving the rise of the sharing economy. In addition, there is a growing trust to value exchanging items with “real people” rather than buying from major companies.

In addition to Zipcar, which rents vehicles by the hour, other rental business models include:

Ann Taylor’s Infinite Style service that allows a person, for a $95 monthly fee, to rent up to three garments at a time.
SnapGoods rents cameras, power tools and home appliances, such as blenders.
Frankfurt airport has a service that allows travelers to store winter coats when flying to warmer climates. Other businesses are considering a service to rent cold weather clothing to travelers arriving from tropical areas.
Since about one-third of new vehicles are leased, Cadillac created the “Book By Cadillac” program allowing a person to exchange up to 18 vehicles a year.

The many empty stores in malls create opportunities for “swap meets” and “rental fairs” for various products, using these spaces to also build connections in the local community.

For additional information on renting instead of buying, click here.

Teaching Suggestions

Have students locate examples of sharing economy businesses and rental companies in your community and online.
Have students talk to others to obtain ideas for new types of rental businesses.

Discussion Questions

What do you believe are the benefits and drawbacks of renting instead of owning?
Describe actions that might be taken to determine needs and ideas for rental businesses in a community.