MONEY impacts every single aspect of our basic human needs, from physical aspects such as food, water, and shelter, to our emotional well-being, and relationships. It allows us to pay for higher education, a roof over our head, and even helps us look after our physical health, such as doctor visits and medicines. Yet why is it that we are not taught financial literacy and how to handle money from a young age, when managing money is a necessary life skill to have?
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The lack of financial literacy in the United States is mind boggling. According to a 2015 research study from Annamaria Lusardi of George Washington University and Olivia Mitchell of the University of Pennsylvania, only 30% of Americans were able to answer three simple financial questions about inflation, interest compounding, and risk diversification. Yes friends, only 30% were able to respond to those financial questions. And the lack of financial knowledge is not only in the USA, but a global phenomenon.
Now, the good news is that things are slowly changing, as schools are starting to incorporate financial literacy into their curriculums and financial institutions, such as banks, are realizing the importance of offering financial education on their platforms. However, we still have a very, very long way to go.
As children soon become college students, saddled with student and credit card debt and eventually enter the workforce, not only carrying that extra weight of concern on their shoulders, but they lack the knowledge and skillset to actively manage money, and thus, the cycle of debt repeats itself over and over again.
Then we have the case where many young students cannot even go to college due to the exorbitant costs, so they enter the labor force at lower paying jobs and where wages have been stagnant for decades, despite the cost of living rising annually. And with the ease at which credit is given to individuals, soon enough they too become saddled with debt and without the knowledge on how to manage it (and avoid it)!
Add to this pot of financial uncertainty, the negative consequences of the Covid-19 pandemic! Yes, it has impacted people’s financial health globally, but the largest sufferers have been women and minorities, as the sectors most hard hit of the economy such as leisure, hospitality, and services have a higher percentage of employees from these groups. And there we have it, the gender and social wealth gap continues to widen.
So, how do we fix this?
In my opinion, it is through being exposed to Financial Education from a young age, both at home and in school. As well as through employers and government programs. We should be bombarded with financial literacy at all stages of our life from childhood to adulthood, as our financial milestones change! We should be talking about money openly, honestly, and frankly.
We should be teaching money management and all aspects of Financial Literacy as a necessary skill in life. Because at the end of the day, financial literacy is the ultimate equalizer in a world of inequality.
Wear Your Money Crown & Rule Your Finances!
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