Food, Shelter and Clothing are considered basic human needs over thousands of years of human existence. Over time we have evolved into needing education and healthcare also as two additional basic human needs.
Ability to buy food, shelter and clothing as well as to pay for healthcare and education needs is essential for our survival. If we don’t have enough money to do so, our well being suffers.
Unfortunately, most Americans lack proper education and training to manage the basic financial needs and lack the knowledge needed to provide lifelong wellbeing for themselves and their families.
Here are quotes from Time Magazines on the extent of the problem. “A number of surveys illustrate the extent of the problem, showing that a substantial proportion of American population fail the basic financial literacy tests. In a study conducted by fellows of the TIAA-CREF Institute, Americans over 50 were asked three questions. To answer them correctly, they needed to understand interest rates, the effects of inflation, and the concept of risk diversification. Only one-third of the respondents were able to correctly answer all three questions.”
“The problem is likely to become worse as Generations X and Y head into middle age: A recent survey from the Financial Industry Regulatory Authority (FINRA) found that young Americans were less likely to be financially capable than older Americans. However, that’s hardly surprising. Even though financial decision-making is more complex today than ever before, 26 states have no financial literacy requirements at all in their K-12 education systems. Only four states mandate that students take a personal finance class in high school.” “Minorities, along with women, have some of the lowest financial literacy rates in the nation”. “People who have a lower degree of financial literacy tend to borrow more, accumulate less wealth, and pay more in fees for financial products. They are less likely to invest, more likely to have trouble with debt, and less likely to know the terms of their mortgages and other loans.”
Financial education must start early. Like reading and math, financial education must become part of the core curriculum in our schools. Likewise, parents should engage in regular, constructive conversations about money matters to give kids a solid foundation for financial well being. Teaching our kids to be financially savvy is a gift – one that will keep on giving throughout the course of their lives. Help your children develop positive financial habits and teaching them early!
Author: Bala Joshi