Today marks the beginning of Financial Literacy Month. In case you have never heard of this, let me tell you a little about it. According to the White House proclamation, National Financial Capability Month is a time to renew our support for “informed financial decisions that will open doors to the middle class and help ensure economic security for all.”
Today, a majority of consumers are experiencing some sort of financial difficulty causing a significant impact on their everyday lives. In fact, Americans carry more than $2 trillion in consumer debt and 30 percent of consumers report having no extra cash; making it impossible to escape the burden of living paycheck to paycheck.
The United States has recognized April as Financial Literacy Month since 2003, and for good reason. Too many Americans are insufficiently educated about their personal finances. No matter what day or month of the year a consumer begins their 30 step path to financial wellness, it will help them to create a successful strategy to better their overall financial position. National Financial Literacy Month is recognized in an effort to highlight the importance of financial literacy and teach Americans how to establish and maintain healthy financial habits.
State Of The Financial Union
In major American cities today, nearly half (45 percent) of households are living in a state of persistent financial insecurity with almost no savings to cover emergencies or plan for the future. I believe that given the opportunity, each of these households can save, build assets and create a more prosperous future for themselves and their children. To reach that goal, some families require support to improve their financial capability by helping them increase their financial knowledge, skills, and access to fair and affordable financial products.
Financial capability, unlike financial education, is not learned solely in a classroom. It needs to be developed over time and made available during key decision-making moments throughout a person’s life, such as when they leave home for the first time, buy a house or rent an apartment, get a new job, have a child or pay taxes. And to ensure maximum impact, trusted financial advice and products need to be embedded in trusted institutions, such as schools, workplaces and community centers.
Research shows that the precursors for financial well-being in adulthood — such as good decision-making skills and attitudes about finances — are built during childhood and youth. That means we need to start early, arming young people with financial skills that will help them become financially capable adults.
Many states now require financial education in schools, but knowing how to save, budget and build credit is only the first step. Becoming financially capable also requires practice. One pilot study, for example, found that pairing financial education with the opportunity to “practice” using a real savings account enhanced students’ knowledge of financial information.
Many of the country’s financial institutions and nonprofit financial educational organizations promote the month by holding promotional events and creating educational materials that center around effectively handling money and dealing with debt.
Won’t you consider joining millions of others on the journey to financial literacy and inevitably, financial freedom?