If you name 10 things you do every day, I’d bet that at least nine of them would directly (or indirectly) involve money. Understanding how money works is critical to everyday life and it’s one of the major reasons why many states are finally reviewing its high school graduation requirements in relation to how much personal finance is taught.
Currently, it's estimated that only 1 in 6 graduating high school students have any kind of personal finance class before graduation. This leaves millions of young adults completely unprepared to face important financial decisions, manage a basic budget and lacking an understanding of interest rates, taxes or investing. According to the Financial Industry Regulatory Authority, 63% of Americans are categorized as “financially illiterate”.
Simply put, the definition of “Financial Literacy” is the education and understanding of knowing how to earn, save, spend and invest money, as well as, the skills and ability to use financial resources to make decisions. Seems pretty cut and dry, right? Well, for one reason or another, the number show Americans are failing…
Out of 1,500 U.S. adults surveyed last year, respondents said that, on average, they lost $1,230 dollars in 2018 by not properly understanding basic household finance issues – that's about the monthly mortgage on a modest home. Almost 20% said that not understanding their finances cost them $2,500, and altogether, a lack of financial literacy cost Americans a total of $295 billion in 2018.
April as “Financial Literacy Month”, created to “raise public awareness about the importance of financial education in the United States and the serious consequences that may be associated with a lack of understanding about personal finances”, however this message isn’t making it down to where it matters most – schools.
There is no question that everyone loses if there is a lack of education surrounding money management and other financial decisions. Bankruptcies, college load debt and credit card debt are examples of money issues that could be reduced with better education. So, if you’re a parent who often stresses about money each month, here's a closer look at financial literacy and what it should mean to you.
How To Learn More About Finance
Signs That You May Need Help
You may already be aware a problem exists, but just in case, here are some signs that you need some assistance with financial matters:
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