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Empowering Californians: financial literacy initiative tackles Californians' urge to spend.

THE STATISTICS are downright staggering:


* 40 percent of Americans say they live beyond their means.

* One in four women retire on an income below the poverty level.

* Outstanding non-secured consumer debt rose from $805 billion in 1990 to $1.65 trillion in 2001.

* The average 50-year-old has less than $40,000 in personal wealth.

* 66 percent of Americans don't pay off their credit card bill each month.

And the list goes on.

To be part of the solution to this enormous problem, CalCPA launched a major financial literacy initiative during the summer with a simple, yet powerful mission: to improve the financial literacy of Californians.

"The information about Americans' financial practices is alarming," says CalCPA Chair Steve Wimmers, who chose to make the initiative the cornerstone of his term. "Through our initiative, CPAs are in a unique position to help improve financial practices of the public--to help protect the public."

But there is more than just one benefit of this multifaceted initiative. According to Nellie Mae, undergraduate college students carry an average of three credit cards, while the U.S. Senate reports that 45 percent of college students are in credit card debt, with an average debt of more than $3,000.

"CalCPA has the opportunity to improve the personal financial literacy of college students and to collaborate with interested faculty and students to serve larger groups such as younger students, teachers and their local communities," says CPA and San Francisco State University

professor John McWilliams.

"College students have wonderful energy and motivation for projects they believe in. Their ability to connect with the younger generation, along with their ties to their varied communities, presents unlimited possibilities for CalCPA's financial literacy initiative in which everyone benefits," he says.


After launching the initiative in July. Wimmers appointed Los Angeles-based CPA/PFS Michael Eisenberg as chair of the new statewide Financial Literacy Committee. The committee, which includes representatives from all major member segments and every chapter, held its inaugural meeting in September and met again in December.

"The scope of financial literacy education is huge," says Eisenberg. "And the audiences who could benefit from it are equally as vast. It was clear to the committee, as early as our first meeting, that CalCPA's entree into financial literacy would be multidimensional. We won't limit ourselves to working with a single audience. If a group wants us, CalCPA members will be there.

"There is tremendous energy surrounding this initiative and CPAs can participate in so many ways. You can educate students about financial literacy. You can speak on the subject at Rotary or Chamber of Commerce meetings. You can speak to members of your temples and churches. The need is everywhere."

There are also opportunities for CPAs to volunteer to serve on the boards of organizations that provide financial literacy education. "Many of these organizations do not have someone with a CPA's training and experience to help formulate their programs," says Eisenberg. "Adding your expertise would be invaluable."


An arm of CalCPA's financial literacy program that is uniquely our own has been dubbed "Dollars and Sense." The program teams CalCPA members with legislators, who host town hall-style workshops that feature brief overviews from CPAs on financial literacy topics, such as:

* Setting Financial Goals;

* Creating a Budget;

* Credit and Debt;

* Money-Saving Strategies;

* Making College a Reality; and

* Tax Tips

Also, with the recent firestorms in mind, we'll include a special segment on disaster preparedness as it relates to finances.

"Most of the program presentation will revolve around a Q & A between the audience and CPA panel," says Jerry Nightingale, chair of the Financial Literacy Committee's Legislative Subcommittee. "These informal interchanges will allow individuals' specific questions to be answered, which goes a long way when building goodwill with the public."

Nightingale adds that CalCPA will provide each Dollars and Sense participant with reference materials to take home.

CPA Assemblyman John Campbell has agreed to host the inaugural Dollars and Sense event Jan. 24 in Irvine and events with other legislators and city governing bodies are in the works. CPA panelists for the Jan. 24 event include Campbell, Michael Klarin, Leonard Wright, Patrick Rogan and Michelle Walters.


While CalCPA members can't go home and pay bills for Californians, or stop them from spending money they don't have, you can teach sound financial practices.

"The best way is to create real-life situations for your audience," says Financial Literacy Committee member Bruce Gray. "I once worked with girls in a residential group home on a project that provided them some basic 'costs' and information about what they could earn in various types of jobs. They had to make decisions about how they would spend their earnings. Periodically, I threw in an unexpected expense so that they had to figure out how they were going to handle the unexpected. Simulation isn't reality, but the lessons can be learned--at least somewhat--on paper before having to struggle with the reality of experience."

CalCPA members will have ample opportunity to engage in problem solving with Californians. "A major element of the financial literacy initiative involves CalCPA members working with existing community-based financial literacy programs," says Andrew Newman, chair of the Grassroots Subcommittee.

In January, 30 CalCPA members are participating in a CalCPA/Junior Achievement Day. The CPAs will take the message of financial literacy to elementary schools in Southern California and spend half a day working with students.

Additionally, the financial literacy speakers bureau is developing presentations on a variety of topics that members will be able to use with all levels of community-based groups, including business groups, schools, service clubs, churches and temples.

In 2004, says Irving Eisenberg, Speakers Bureau Subcommittee chair, "we plan to travel to all interested chapters and discuss ways to get involved in financial literacy as well as provide presentation skills training."

San Diego Chapter members Barry Kohn, Jeanne Shannon and Jeannie Mann launched the financial literacy speakers bureau activities in late fall when each taught a financial literacy class for the Community Self-Sufficient Collaborative in Ocean Beach.

"I am very grateful to CalCPA members and staff for helping us achieve our goal of improving the financial literacy of Californians," says Wimmers. "Together, we can make a huge difference in the lives of students, clients, family members, friends and the public, as well as restore faith in the profession."


Sign up to be a financial literacy volunteer. We'll match your abilities and interests with one of our varied opportunities to teach financial literacy to Californians.


An interview with CPA Assemblyman JOHN CAMPBELL

CALCPA'S BOARD OF DIRECTORS recently endorsed Assemblyman John Campbell (R-Irvine) in his bid for a state Senate seat from Orange County. California CPA caught up with the CPA legislator in late November, as the Legislature embarked on its special session. Campbell, who agreed to host CalCPA's inaugural Dollars and Sense workshop, talked to us about financial literacy and how the lessons CalCPA members are spreading throughout California would be well-heeded by his peers in Sacramento as they tackle the enormous budget deficit.


* Why did you decide to host a Dollars and Sense event?

There is so much emphasis today on budgeting, investments, fiscal and financial matters, both public and private. I think CPAs can be a great resource to everyone who deals with financial matters and the Dollars and Sense town halls are the ideal way to show what valuable resources CPAs are. CPAs should communicate more actively with the public--it will serve the public well.

* Lots of organizations--credit card companies, banks, NASDAQ--are tackling the issue of financial literacy. Why CPAs?

This is what CPAs do. This is what we've been trained and licensed to do. CPAs know more about financial literacy than anyone else. What's more, we aren't selling anything. As a CPA speaking to the public, I have no reason to encourage an individual to assume more or less debt, or to encourage borrowing. As CPAs, we can objectively look at what is best for an individual without clouding our message by the need or desire to sell a product or service.

* If you could take the message of financial literacy to the Legislature, what would be the top lessons that you would want to teach?

It's funny, the top lesson I'd teach the Legislature is the same I'd teach any and everyone: Don't spend what you do not have.

Other lessons I would teach are to balance the budget and to do it in a way that is honest, without fooling ourselves. For example, in the [2003] budget, the Legislature played accounting games by moving expenses from one year to another, but not changing the total spending. So, we put everything off to next year [2004] when we knew things were not going to get any better.


It comes down to considering not just short-term but also the long-term effects of your decisions. In the Legislature, we have to consider the impact on next year.

Unfortunately much of what happens in Sacramento is driven by the election calendar. The 2002 budget was structured to get Davis and others past the 2002 election. It wasn't an accident that two to three weeks after the election, everything came crashing down.

Again, I think other lessons I'd pass on in Sacramento are the same financial literacy concepts I'd tell anyone. Save for your retirement. It's hard to do, there are new cars to buy, big screen TVs to buy, beer to buy. So we need to do what employers do and set up a third-party discipline, such as employers withholding money from employees' paychecks for their 401(k)s.

The Legislature needs this just as much--if not more than--the average citizen. The constitutional amendment on spending limits (ACA2.5x) that I introduced [in 2003] would limit government spending in proportion to inflation regardless of revenue. In good revenue years, much like with a business, money must go into a reserve and to pay off long-term debt. Building a reserve allows us to save for bad years, so we don't end up in the situation we are in now. We also need to work with cities and counties to provide them with more predictable, stable and controllable revenue sources that are not dependent on the largess of the state for their funding.

* How has being a CPA prepared you for the Assembly?

Being a CPA has prepared me extremely well. I'm the only CPA in the Legislature in the past 25 years, and I hope that there will be a lot more in the next 25 years. So much of what happens in state government is related to budgeting, borrowing and tax revenues, and the financial literacy of legislators is not good. Many can't read an income statement or balance sheet. And they are making decisions that involve billions of dollars.

* What is your outlook for the coming year under the new administration?

We have a new charismatic, popular governor with a very strong persona and far-reaching ideas that he'd like to implement. But the Legislature hasn't changed since before he was elected, and they are going to resist some of those far-reaching ideas. Many significant proposals have been put forth and how successful they are will depend on the battle for public opinion. But either through the Legislature or ballot initiative, I think we'll see change happen. It's a different climate than the past five years.

Clar Rosso is CalCPA's director of communications. You can reach her at
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Author:Rosso, Clar
Publication:California CPA
Article Type:Cover Story
Geographic Code:1U9CA
Date:Jan 1, 2004
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