What is Financial Literacy?
As defined in “Investopedia,” financial literacy is the possession of knowledge and understanding of financial matters. Financial literacy is mainly used in connection with personal finance matters. Financial literacy often entails the knowledge of properly making decisions pertaining to certain personal finance areas like real estate, insurance, investing, tax planning and retirement. It also involves intimate knowledge of financial concepts like compound interest, financial planning, the mechanics of a credit card, advantageous savings methods, consumer rights, time value of money, etc.
According to excerpts from the 2015 “Strategy for Assuring Financial Empowerment (SAFE) Report issued by The Financial Literacy and Education Commission formed under the Fair and Accurate Credit Transactions Act of 2003 by the United States Treasury Department, evidence shows that many young people lack the financial knowledge needed to make sound decisions.
The SAFE Report also states the following:
The latest National Financial Capability Study found that young adults answered fewer questions correctly about basic financial concepts than older cohorts. Only 30 percent of young adults (ages 18-34) rated their financial skills as “very strong.” The young people surveyed see the value of early financial education, with nearly 86 percent saying that financial education should be offered in school. Yet, only 36 percent of young adults surveyed have been offered financial education, and only 22 percent have received financial education. But if the needs are great, so are the potential benefits both to the nation’s young people and to America as a whole. By helping young Americans to develop financial knowledge, skills and habits, we strengthen our nation’s families and communities. We open up opportunities and extend ladders of economic mobility. We help to build stronger families and a more vibrant, more prosperous economy.
In reading this report, it is evident that a serious problem exists in our country concerning financial literacy. It is also not just a young adult problem. Young adults age to become older adults and also become parents of younger adults. Thus the task of our US Treasury Department is to formulate a plan to address this issue.
Eradicating Financial Illiteracy
One company that is joining the US Treasury Department in its initiative to eradicate financial illiteracy is Transamerica and World Financial Group/World System Builder. World System Builder is the largest organization in World Financial Group lead by WFG Executive Chairman, Xuan Nguyen. Xuan Nguyen and his team of 15+ thousand financial professionals have pledged to financially educate 1 million people by the year of 2020.
Financial Education Workshops will be conducted at Financial Centers located across the United States and Canada, covering topics such as “Building the Proper Financial Foundation,” “Debt Management,” “Retirement Planning,” “Proper Protection” and “Building Wealth” to name a few. Workshops are complimentary to participants, and class materials are under $10.
As a Certified Financial Educator, I continuously see the adverse effects, long term and short term, on individuals’ finances when making financial decisions without the proper knowledge.
I strongly advise everyone to invest the time to participate in forums providing financial education. For more information on Workshop schedules and to locate a Financial Center near you contact us @firstname.lastname@example.org or World System Builder at email@example.com.
About the Author: LaShonda Johnson is a licensed certified financial educator. She is also a founder of Hou$ton Hou$ewives of Finance where, “Our clients mean the world to us! To be able to change a life financially is a very rewarding mission. Each principle here at HHF started like everyone else, letting our finances manage our lives. We all knew how to work hard for money and how to spend money. As we embraced the powerful impact of learning how to manage our finances, we each realized that we wanted to teach others how to accomplish what we have – a solid financial foundation!” Please visit our website at: Hou$ton Hou$ewives of Finance.