Financial Literacy, our Online Identity and Scams... Make sense? (Well, It really does)

First things first: I wish readers who kindly take some minutes to visit this blog and read these modest lines, a New Year full of energy, health, the patience to overcome a very difficult 2009 and above all, the ability to manage wisely their money and strengthen that "sixth financial sense" in order to avoid many risks they could probably find during 2010 such as scams and other online risks.

Since we've continued learning about new -and sometimes creative- examples of scams posing serious risks for seniors as well as attempts to prey on people's candor and greed (we should not forget the already famous affairs involving Bernie Madoff and Allen Stanford that caught many people off guard), even though learning those basic financial skills intended to help us manage our money wisely mostly involve practical subjects such as investments, returns, interest rates, savings, credit cards, debt, foreclosures, financial calculators, computers, etc, while we start the New Year, we should not forget as well the urgency to continue protecting ourselves while we're online: protecting ourselves from identity theft and phising scams.

In addition to the video (a very clear explanation) accompanying this post, let's consider the following article 2009 Identity Theft Statistics, some predictions for 2010 as well as a list of informational strategies intended to avoid identity theft.


2009 Identity Theft Statistics

Filed Under Identity Theft

Identity theft is defined as the process of using someone else’s personal information for your own personal gain. The Javelin Strategy & Research Center has been studying identity theft closely since 2004. Each year, they release their findings. Their 2009 study reveals that:

· Identity theft is on the rise, affecting almost 10 million victims in 2008 (a 22% increase from 2007)

· Victims are spending less money out of pocket to correct the damage from ID theft. The mean cost per victim is $500, and most victims pay nothing due to zero-liability fraud protection programs offered by their financial institutions.

· 71% of fraud happens within a week of stealing a victim’s personal data.

· Low-tech methods for stealing personal information are still the most popular for identity thieves. Stolen wallets and physical documents accounted for 43% of all identity theft, while online methods accounted for only 11%.

Types of Identity Theft

ID theft can happen to anyone, and it can come in all shapes and sizes. For example, your credit card digits could be stolen and used to make online purchases; a thief could impersonate you to open up a loan in your name; a felon could commit a crime and pretend to be you when caught; or someone could use your personal information to apply for a job.

Here’s a brief overview and description of each type of identity theft, based on Federal Trade Commission complaint data:

· Credit Card fraud (26%): Credit card fraud can occur when someone acquires your credit card number and uses it to make a purchase.

· Utilities fraud (18%): Utilities are opened using the name of a child or someone who does not live at the residence. Parents desperate for water, gas, and electricity will use their child’s clean credit report to be approved for utilities.

· Bank fraud (17%): There are many forms of bank fraud, including check theft, changing the amount on a check, and ATM pass code theft.

· Employment fraud (12%): Employment fraud occurs when someone without a valid Social Security number borrows someone else’s to obtain a job.

· Loan fraud (5%): Loan fraud occurs when someone applies for a loan in your name. This can occur even if the Social Security number does not match the name exactly.

· Government fraud (9%): This type of fraud includes tax, Social Security, and driver license fraud.

· Other (13%)

For more identity theft statistics, visit our Official Identity Theft Statistics page, which we update frequently with the latest facts and figures about this fast-growing crime

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Financial Culture / Cultura Financiera ©

Financial Literacy: some online tools for study and practice purposes... (1)

It's been -in my opinion- good to witness and follow up as closely as possible the global effort that many governments have been carrying out intended to spread that badly needed basic financial knowledge to as many people as possible; even though that effort has involved launching many good websites and revamping others in order to offer a more complete informational frame of referenced about many small yet very important subjects for people to know (I hope to share with you on following posts a list of many of those websites), it's also good to realize that there are other free online alternatives such as many really easy to understand instructional videos.

I'd somehow dare to say that a key basic financial subject for people to get familiar with, should be the concept Time Value of Money.

It is my modest yet firm belief that if you want to become a savvy investor, learning and understanding as detailed as possible what Time Value of Money means, you should be able to understand with a bit of reading and practice the difference between how investments work on your favor and how credit cards work also on your favor... temporarily. As a fact of the matter, I also think that this is the bottom line of a good Money Management process.

The videos accompanying this note, will be the first part of a small series talking about Time Value of Money; I'll try to get rid as much as possible of the underlying technicalities focusing on the other hand on a basic practical perspective about its importance...

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Financial Culture / Cultura Financiera ©

Are there skilled professionals teaching Financial Literacy?

Even though we are focused on discussing as thoroughly as possible the efforts that many governments are already doing (there's still a lot to do) intended to help people not only to become more aware about the scope of their financial problems, providing them with the informational tools to start solving those problems but to make them realize how important Financial Literacy is as a key tool, if that people really want to succeed in order to plan for a -hopefully- less risky financial future, Are there skilled financial professionals out there available to teach them?

Talking a bit about this effort, as a concrete reference, if the US Government is carrying out some programs to achieve this ambitious long-term goal, Do we people on Main Street also realize the importance of having skilled financial professionals teaching us how to achieve our personal financial goals and avoid making mistakes in a still complex global financial setting? (What's happening in Dubai is a very clear example...)

In my very humble opinion although financial institutions should play a considerably more active role in educating people, Bank of America is a reasonable example of some efforts intended to spread Financial Literacy within some communities.

Based upon a very clear financial diagnosis where people still lack a basic financial education, let's consider the following excerpt from the article Americans hunger for better Financial Literacy that makes emphasis in the urgency not only to learn about this subject but to find more experienced financial advisers ready to teach them:

"Financial Advisers in Demand

In addition to getting themselves more educated, many also are looking to professionals more for financial advice. While 65% say they feel unsure about investing because of the economic crisis, four in 10 (38%) say they've started meeting with a financial adviser, or plan to soon, to work toward securing their financial future.

Nearly one-third (31%) admit they'd like advice from a professional on how to invest their money, the study found".

Let's also consider watching the videos accompanying these comments as a concrete reference as to the role of Financial Advisers as key educators and the new online resources already available for people -from teenagers to adults- to learn the basics of Financial Literacy; after watching these pieces of information, I'd conclude that the most important thing is encourage them constantly to ASK their teachers and financial advisers all sorts of questions...

Image: Flickr

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Financial Literacy as an evolving learning tool... Why?

During the last few days, I've been noticing consistent evidence of people becoming more aware as to the urgency not only to acquire basic financial skills but to continue exploring more feasible and urgent alternatives to make teenagers learn those same basic skills thinking about what it can be defined as the ultimate financial - educational goal: help them to learn how to manage money more efficiently in these tough economic times with a -why not- long term goal in mind.

I think that the couple of videos accompanying these notes, reflect in a critic and realistic way, the difficult economic outlook where many people not only in America but in many other countries as well realize the critical importance of a more careful money management and not only its immediate but long term financial implications.

It's been already discussed on previous posts about the urgency for people to realize that things have changed radically and dramatically in many aspects being money the most obvious; in this regard, most opinions are coincidental as to why should financial literacy be taught.

Considering this evidence, let's think about "Help your children manage finances in a bad economy - teach them Financial Literacy early"; in my opinion, this article reflects clearly how Financial Literacy is an already evolving (and gradually stronger) learning tool for children, teenagers and adults.

Help Your Children Manage Finances in a Bad Economy - Teach them Financial Literacy Early

by John Davis

US has been facing its worst recession for the past few months. This should be treated as a reminder to all parents who are concerned about their child’s financial security in the years to come. Financial literacy should be taught to young adults by their parents. In fact making it a part of the school syllabus with all the nuances of financial management included would do well when they have to start college.

In the present day, college students are those who are relying more on their credit cards, compared to other segments that actively use them. Recently it has been found out that there is a steep 46% increase in the average amount of debt taken by college students, since 2004.

The main cause for this steep climb is because most of them use four or more credit cards at a time. So, by the end of the last year, on an average, a student is left with a debt of $7000. Even with such a bad financial condition, it is a pity to note that one-thirds of them never discuss about credit cards to their parents.

There has been a new act formulated with regard to the usage of credit cards to save the current economy from slopping down further. The new Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 is primarily aimed at protecting college students and young adults, through the inclusion of a requirement that states that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students.

Although the new Act can help to reduce large debts, financial literacy is an important factor to be addressed now. It is highly vital for young adults to learn to build their credit without actually owning a credit card. There are many online personal money management software, that offer free registration, and is very simple to understand and use.

Using budget planning software right from early college days can help them to save well and use their finances to pay for college education. Online tools help young adults to visualize their earning and spending pattern; set realistic budget goals and follow the budget regularly. Most of the personal money management sites provide instant mobile alerts on purchases and monthly balances.

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