Wish You Were More Financially Fluent? This Grant Proposal Could Help



Financial literacy is something that is not taught too often in schools, and most people do not keep budgets and spreadsheets of their spending. If one doesn't earn too much money each year, it may even seem like a worthless exercise. However, lower-income people are the ones who would likely benefit the most from learning more about their personal finances, tax laws, and how to save money even on a shoestring budget. Unfortunately, they also are the least likely to be able to afford an accountant, which holds them in a catch-22.

However, one recently proposed grant that is likely to pass through the House and Senate could change all of that.

The Proposal


Formally known as "The Consumer Financial Education and Empowerment Act", H.R. 6012 was introduced on February 28, 2020. It's a bipartisan effort that is very unlikely to be politically divisive.

These grants would be given to any person or institution who has credentials in a finance-related field and a working knowledge of the tax code. They would lead classes for people of all ages in various topics related to money management. It would include content from how to pay off debt in the best order, the best savings plans for people depending on age, and more that will depend on the curriculum that is to be developed.

This Grant Could Get You a Job


Don't have a CPA license? You can still qualify to be an instructor. Under this grant, full tuition and resources are covered for those willing to be instructors. Although the pay-rate has not been established, it will likely be fairly significant. This would open up opportunities for jobs all across the country.

The Reason This Bill Was Introduced


It would be natural to wonder why this bill was introduced right now. After all, the Internet has plenty of free online resources for financial literacy. Unfortunately, however, these resources often have conflicting information and leave people seeking this information more likely to be confused than educated.

It Started with an Abysmal Report


This bill stemmed from a 2018 report from the Federal Reserve on the status of Americans' finances. Although no controls for Purchase Power Parity (the measure of how far your dollar will go in different regions) were put into place, their report found some sobering results.

After controlling for every major socioeconomic factor except income, they found that a whopping 40% of Americans would not be able to pay $400 for an emergency situation. This is less money than the average ER bill, about how much it costs to replace four car tires, and many other things that are necessary to do. This cohort was then asked how they would cover the bill.

27% of them stated they would use a credit card, but it would need to carry a balance. Given that credit card interest rates go up to around 30% APR, someone who only makes the minimum payment each month could end up being out more than $400 just in interest on the purchase, only adding to their fiscal burdens.

The remainder of that cohort stated that they had neither the savings nor credit to be able to pay that $400 bill. This means that it would go to collections, their credit score would sink even lower, and they may even need to file for bankruptcy.

Will This Grant Help Those Who Need It the Most?


Though the programs it funds will be open to everyone, it is targeted at younger people who are more likely to have a lower income level. The Consumer Financial Protection Bureau has done extensive research on financial well-being. The research shows that people who learn these fundamental concepts and have someone guide them through applying them are far more likely to have financial success even on a low income.

Unsurprisingly, this was found to be directly tied to overall happiness. There were far fewer instances of depression in the population that was low-income but received instruction through a similar program than those who were also low-income but did not receive instruction.

Wrapping It Up


Of course, this bill will need to take its legal course. However, it seems like common sense will make this grant a reality. Between thousands of new jobs and hundreds of thousands of brighter futures, it's a win-win.





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