Gena Wilimitis, Investor Education Coordinator, NM Securities Division

New Mexico Lt. Gov. Diane Denish’s comments at the second annual Summit on Financial Education in April 2008 were prophetic: “As we head into an uncertain national economy, it’s more important than ever that people learn to be wise consumers. Knowing how to save and spend wisely, not to mention avoiding lending scams and outright cons, can help people get ahead rather than just get by.”

Nearly a year later, the economy has spiraled downward, and the skills that Denish talked about — knowing how to manage credit prudently and how to save and invest for the future — have become a matter of survival.

In an effort to help the state’s residents protect themselves from fraud and improve their financial literacy in such challenging times, the state Securities Division is teaming up with AARP New Mexico, the New Mexico Coalition for Financial Education and the Focus Foundation to sponsor the third annual daylong Summit on Financial Education on April 10 at Hotel Albuquerque.

The conference will feature a variety of workshops and seminars designed to improve the money-management skills of New Mexico residents. Its target audience includes new investors, workers nearing retirement, college students, employers and seniors.

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Bernice Geiger, New Mexico Securities Divison

The financial meltdown that’s depleting the savings and income of millions of Americans presents special risk to the estimated 16 million adults who support themselves while also caring for dependent children and elderly parents.

“Millions of adults are facing a generational sandwich that’s putting an economic squeeze on everyone involved,” said Bruce Kohl, director of the New Mexico Securities Division and chairman of the North American Securities Administrators Association’s new investor education program. “Nearly half of those in the so-called ‘sandwich generation’ don’t have enough money to finance their own retirement but consider paying for their children’s college tuition a parental responsibility, all while juggling the rising costs of care for their parents.”

Given the increase in life expectancy, Kohl said, “You’re looking at millions of stressed families across North America. We’re concerned that this stress may make the sandwich generation more susceptible to fraud, depleting the financial resources they need to maintain their families.”

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Sandra Taylor Sawyer, Director, NMSBDC at Clovis Community College

One of the documents commanding lots of a business owner’s attention in these anxious days of recession is the balance sheet, which provides a snapshot of a business’s financial health on any given day. Regular review and analysis of the business’s balance sheet and other financial data allows an owner to avoid being blindsided and offers him or her an opportunity to change course before a business is in danger of failure.

Anatomy of a balance sheet

Every balance sheet has three major parts: assets, liabilities, and owner’s equity. The sum of liabilities plus the owner’s equity must always balance with the assets — thus the origin of the term “balance sheet.”

Assets break down into two categories: current assets and fixed assets. Current assets are those that will convert to cash in a year or less; they include cash, accounts receivable, supplies and inventory. Fixed assets consist of the business’s property, including buildings, equipment and fixtures. These assets have a life expectancy of longer than one year.

The second balance-sheet category, total liabilities, is defined as debt the business owes. Liabilities are broken down the same way total assets are: current liabilities are those to be paid off in a year or less; long-term liabilities are debts that will take more than a year to pay. Current liabilities include accounts, taxes and notes payable. Business loans and mortgages on property are classified as long-term liabilities.

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Paul F. Goblet, Financial Advisor, NMSBIC

When free markets are in free fall, the federal government can intervene and keep the country and economy running by simply printing more money and running a deficit. That’s what lawmakers chose to do last fall to shore up collapsing financial markets.

Small businesses don’t enjoy such powers. They can’t print their own money, and most realize that running a business in the red is risky even in the short term.

Businesses owners face unprecedented challenges in today’s far-reaching recession. Many are being forced to reevaluate where they stand and where they hope to be in the future, and some are being forced to ask for help from consultants or lenders, even though the prospect is embarrassing to them.

Grim reapings

Most businesses in New Mexico have fewer than 25 employees, and most of these are owned and financed by the founder and family members. Their growth depends on the business’s success and financial stability; when one or both of these are threatened, the business often loses its ability to get credit at affordable terms.

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Paul F. Goblet, Investment Advisor, NMSBIC

New Mexicans who hoped that the Treasury Department’s Troubled Asset Relief Program would benefit small businesses by making it easier and cheaper to obtain credit are finding that only a few of the nation’s largest banks received infusions of taxpayer-financed capital — and the ones that did seem reluctant to part with it.

Instead, the state’s businesses are finding lenders reducing or withdrawing credit lines in reaction to the nationwide economic slowdown and to fears that local businesses will suffer from reductions in retail and government spending.

Web of woes

When the word recession is used frequently enough, everyone begins to believe it. Workers assume their jobs are in jeopardy so their families spend less and save more, and this has a dramatic impact on the economy. State and local governments cut programs as tax revenues fall, and banks tighten credit standards, reduce credit availability, and sometimes stop lending.

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