In this election year, financial professionals should be beating the drum to make sure that financial literacy programs continue to receive funding support.
Give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for a lifetime. Government officials should heed the wisdom of that ancient Chinese proverb and give Americans the tools that they need to understand basic financial concepts.
In this election year, pressing issues such as the economy, entitlements and taxes are taking center stage. Financial professionals should be beating the drum to make sure that financial literacy programs — which would help assure that all Americans actually understand these national issues, as well as their own personal finances — continue to receive funding support.
“Other than world hunger, financial literacy is probably the greatest topic of our time,” Paul Auslander, president of the Financial Planning Association, said in April. “People making good money are making foolish decisions about money because they are financially illiterate.”
And many people are aware of their ignorance.
According to the 2012 Consumer Financial Literacy survey from the National Foundation for Credit Counseling, 42% of Americans give themselves a grade of C, D or F in personal finance.
The survey also found that just 43% of adults have a budget and that 22% of those surveyed have no idea what they actually spend each month on housing, food and entertainment.
Other studies have found that young adults and teenagers are equally ill-informed and not on track to show any improvement, all at a time when young people face a difficult job market and are saddled with more personal debt than ever before.
Today's 20-somethings have an average debt of about $45,000, which includes every IOU, from car loans and credit cards to student loans and mortgages. If they don't know how to survive in a world where running up debt can be as easy as tapping on their iPhones, these young people face a precarious future.
For the young, middle-aged and old, we have created the perfect financial storm: a society in which consumers are in charge of their financial well-being but are woefully undereducated and ill-prepared to take on the responsibility of managing it.
Learning how to balance a checkbook, handle a budget and deal with consumer credit should be just as much a part of our national curriculum as learning about history and grammar.
In recent years, the Bush and Obama administrations have sponsored financial literacy councils, which have started a variety of educational programs. But these just aren't enough.
FEW SCHOOL REQUIREMENTS
Twenty-six states have no financial literacy requirements at all in their K-12 education systems, and just four states mandate that students take a personal-finance class in high school.
It is clear that many Americans need better resources and targeted education to help them understand even the basics of finance. To make sure this gets done, everyone — government, the military, schools, the financial services industry and families — must play a role in promoting financial literacy.
“Interest in financial education has been gaining rapidly, but we're not seeing a lot of new programs, because of a lack of resources,” Laura Levine, president of Jump$tart Coalition for Personal Financial Literacy, said recently.
Yes, eradicating financial illiteracy won't be cheap. And with our nation's other problems, it is easy to look the other way and do nothing.
Unfortunately, the cost of financial ignorance is even greater than the cost of education.
It is time to teach our children — and their parents — how to fish.
