Welcome to the Real World A Message From Muriel F. Siebert

Dear Educator,

A first decision facing young adults when they begin to earn money is how to cash or deposit their paycheck. When they look at the net amount of their first check, they may think, "who stole my money"? No one has told them about taxes or deductions. They have entered the real world. Without knowledge of basic personal finance, students will be unprepared to make informed financial decisions.

Young adults must be taught about money. They must be prepared before they graduate from high school to make informed decisions on spending and saving and the uses of credit cards, understand the difference between leasing or buying a car, and how mortgages work. If teens are not prepared to handle their personal finances knowledgeably, many could face bankruptcy before they reach twenty-five.

Today, students and other young adults are often offered credit cards. Yet they are usually unaware of the real cost of credit. Nowhere is it stated that by paying the minimum payment (clearly printed on the front of the credit card statement), they are paying the interest and a very small portion of the principal owed. Thus, if they only pay the minimum each month, they could be paying for last night's pizza dinner and concert tickets for almost a decade or more.

"Wheels!" Often the first major acquisition for young people is a car. Most are not informed about the costs or terms of buying versus leasing. When they do get a car, they learn they can't drive it without auto insurance, yet they know little about insurance.

Whether they go to college or not, many students after leaving high school will plan to move from home. Whether they go solo or share, they will need to know and budget their fixed and variable expenses such as rent, utilities, telephone, food, clothing, entertainment, etc.

Future Homeowners. Someday they may want to purchase an apartment or home. They need the skills to investigate mortgage loans and select the one that is right for their circumstances. The choices between fixed or variable rates, 15 versus 30 years, and options to prepay must be understood before entering into a long-term commitment. Millions of homeowners do not know, for example, that they can refinance their mortgages to take advantage when interest rates are low. In some situations, consumers can also arrange to pay half of their mortgage biweekly instead of once a month, resulting in substantial long-term savings.

The Internet has revolutionized the access to and distribution of information. It is the greatest source for finding the most up-to-date information about current rates and new financial products, as they become available. Understanding basic principles of personal finance will enable students to research questions and make informed decisions.

As the first woman member of the New York Stock Exchange and during my tenure as Superintendent of Banks for the State of New York, there were constant reminders that people who could at least afford it were the most often paying the most for goods and services. The realization that many people lack the knowledge and skills to handle basic financial matters has led to the development of this program and my ongoing efforts to promote financial literacy.

I am very grateful to all those who worked with the Muriel F. Siebert Foundation to develop the "Personal Finance Program: Taking Control Of Your Financial Future". An important goal of the Foundation and mine is that every high school student will benefit from this knowledge of basic concepts of personal finance.

The success of this course of study is now in the hands of those who will teach it. Thank you in advance to teachers in New York high school, who will bring this important financial education to their students.

Sincerely,

Muriel F. Siebert Foundation