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Financial Literacy Is More Essential Than Ever

Mayra Rodriguez Valladares, Contributor, Forbes
February 1, 2021

The pandemic has exposed many vulnerabilities and challenges that the United States needs to confront immediately. On a daily basis, I see those vulnerabilities in the area of financial literacy, that is, knowledge about earnings, expenditures, savings, investments, and long-term financial planning.  According to studies compiled by the U.S. Financial Literacy and Education Commission, only one-third of adults could answer at least four of five financial literacy questions on fundamental concepts such as mortgages, interest rates, inflation and risk. About 40% of Americans turn to family, friends, or coworkers when they have a question about finances; to my knowledge there has not been a study about those individuals’ expertise about financial matters; moreover, over 20% of Americans polled by the National Financial Educators Council did not feel they had anyone they trusted when they had a question about finance.

This economic and public health crisis has convinced me more than ever that financial literacy education, from kindergarteners to senior citizens, is essential to improve Americans’ standard of living and to reduce income inequality. Not having knowledge about financial literacy topics such as economics, interest rates, savings, loans, investments, and long-term financial planning is a significant hindrance to economic opportunity and mobility. Lack of financial literacy can have a devastating impact on adults’ consumer credit scores, which influences not only one's ability to obtain loans and credit cards, but also impacts our ability to purchase or rent a home as well as even the type of employment one may be able to get. Even thinking about personal finances makes over 50% of American adults anxious.

Despite the fact that we make decisions about money every day, less than half of America’s states require students to take a course on personal finance. And yet, as soon as students complete their secondary school education, they go out into the world with very little knowledge about the responsible use of credit cards, student loans, mortgages, and other types of consumer debt, not to mention how to develop a long-term financial plan to develop and achieve personal financial objectives.

 

STATUS OF PERSONAL FINANCE EDUCATION ACROSS THE NATION—2020

 

STATUS OF PERSONAL FINANCE EDUCATION ACROSS THE NATION—2020

Council for Economic Education

In its biennial survey, the Council for Economic Education shows that there has been a slight increase in states requiring at least one semester-course in personal finance and economics in high school to graduate. Yet, there has been a decrease in the number of states that require testing to show whether learning objectives in those courses are being met.

 

STATUS OF PERSONAL FINANCE EDUCATION ACROSS THE NATION—2020

 

STATUS OF PERSONAL FINANCE EDUCATION ACROSS THE NATION—2020

Council for Economic Education

No one should wait for federal, state, or municipal governments to implement comprehensive financial literacy programs for primary and secondary students. There are many free and commercial resources that are available to help us equip our children and even ourselves with invaluable financial literacy lessons.

In addition to the research that the Council for Economic Education conducts, it also has a free treasure trove of K-12 education resources for educators and students, including Gen i Revolution, an online finance game for high schoolers.

One of the most comprehensive financial education online programs, which is free, is the St. Louis Fed’s Economic Education Program. The Fed’s EconLowDown has over 400 free courses in English and Spanish for students from Kindergarten all the way to college. The modules are created by economics and education professionals at the Federal Reserve Bank of St. Louis as well as by professionals at the Atlanta, Chicago, Cleveland, Kansas City, New York and Philadelphia Federal Reserve banks. There are also resources from the Federal Reserve Board, U.S. Currency Education Program and the FINRA Foundation. In addition to courses for students, the Federal Reserve district banks also have resources for teachers’ professional development on the page links above. For many years, the Federal Reserve Bank of New York has published educational comic books both in English and Spanish.

The Federal Deposit Insurance Corporation has been running a free program, Money Smart, since 2001, and the content is updated regularly. Money Smart’s objective is to enhance people’s financial skills and to create positive banking relationships. The courses are designed for Kindergarten to young adults, adults, senior citizens to avoid financial exploitation, and for small business owners. There are also resources for educators and to teach financial literacy trainers.

The Consumer Financial Protection Bureau, created under the Wall Street Reform and Consumer Protection Act of 2010, also has a youth financial education program. The CFPB has resources for educators, parents, and students.

The Department of Treasury has several free online educational programs from Kindergarten to young adults. As part of the Financial Literacy and Education Commission created in 2003, the U.S. Treasury set up MyMoney.Gov, a national financial education website. Additionally, together with the Bureau of Engraving and Printing and the U.S. Secret Service, the U.S. Treasury runs a program on U.S. currency. Additionally, Treasury has a financial literacy program, and through the U.S. Mint, there are resources for educators and students. Girl and Boy Scouts can also earn badges through a financial literacy program designed by the U.S. Mint.

The Securities and Exchange Commission has Tips for Teaching Students About Saving and Investing. More in-depth SEC educational resources are designed for young adults and upward who want to learn about investing, investment products.

The Commodities Futures Trading Commission (CFTC) has educational resources to help commodities, futures, and swaps traders avoid fraud, such as Ponzi schemes. It also has numerous free publications to help detects scams and fraud. And unlike other regulators, the CFTC has a section devoted to the agriculture community.

Governmental and regulatory agencies are not the only ones that provide finance education for students. The New York Institute of Finance[1] has recently launched the Young Financial Scholar Program designed for Middle and High School students. Unlike the government and regulatory free resources, this program has live instruction, tailored research projects, mentoring programs and charges a fee. NYIF’s program is global with students from all over the U.S. as well as China, India, and Korea. Additionally, NYIF offers online courses as well.

Varsity Tutors offers some classes in finance and economics tailored to secondary school and university students. This education vendor also offers on call tutors for a fee. From time to time, it offers free courses on a wide range of topics.

 

[1] Disclosure: As part of my consulting and training practice, I have delivered numerous bank, capital markets, and financial regulations courses at the New York Institute of Finance since 2006.

 

This article was written by Mayra Rodriguez Valladares from Forbes and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.