April is known as Financial Literacy Month.
The initiative was first recognized by the National Endowment for Financial Education (NEFE) and, in 2000, was turned over to the Jump$tart Coalition. Both NEFE and Jump$tart have been strong advocates for promoting financial literacy. This ultimately led to a show of support from the U.S. government, which passed a resolution in 2004 to declare April as Financial Literacy Month.
Financial literacy is the ability to know how to manage one’s financial resources. Basic financial literacy helps individuals and families become self-sufficient, achieve their definition of financial success, and achieve financial stability.
April is an opportunity to bring financial awareness to everyone at all stages of life, from children to young adults and mature adults. However, learning about finances and developing financial skills does not stop on April 30.
Moreover, learning and applying financial knowledge should continue year-round at home and in school.
The Children Are Our Future
One day out of the blue, my daughter, who was nine years old at the time, told me a story about her 10-year-old friend. She said the young man has more than $950 in savings. She paused and reflected for a moment and said, with a serious and straight face, “He is going to have a good retirement.”
I chuckled with a big smile on my face.
I was both proud and bewildered by the comment. On the one hand, my daughter was clearly listening to the financial knowledge that I shared at home, and she recognized that savings were important. On the other hand, I wondered if I was lecturing my children about finances too often! And apart from my children, I wondered about other children. At home, and in school, are they getting the financial lessons that they need in order to be financially successful in their lives?
States Provide Financial Literacy Initiatives
States are getting more involved legislatively to add financial education to K-12 curricula. Each year, more and more states are requiring financial education courses in high schools. Florida, Nebraska, Ohio, and Rhode Island are the most recent states to implement mandates.
According to the Council for Economic Education, 23 states in the U.S. have mandates supporting financial education. Research shows us that financial education is positively correlated with financial literacy—meaning that individuals with financial education are more likely to have higher financial literacy and the resources to make better financial decisions.
The Importance of Financial Literacy
Over the past three decades, the lack of financial literacy has led to many financial pitfalls for many Americans. For example, bad financial decisions, lack of savings, lack of emergency funds, ill-advised automobile purchases, bankruptcies, and high levels of household debt.
Statistics show that many Americans have money problems because of financial illiteracy; four in seven Americans are financially illiterate.
Not all is lost, though.
Individuals can become financially literate through financial education. The financial information learned in schools, from financial institutions, and from life lessons can help people develop basic financial skills. For instance, creating a budget, checking credit scores, managing debt, paying bills on time, and saving money consistently.
As individuals, we can take time to reflect on and improve our personal finances. We can ask ourselves, what are my financial strengths and weaknesses? Once we identify our weaknesses, we can make an effort to turn them into financial strengths.
Financial Literacy Is Our Responsibility
To make wise and important financial decisions, we all need a foundational level of financial education. Children and young adults can benefit from understanding the importance of financial literacy. They can also learn from others’ positive or negative financial situations. Thankfully, our country is beginning to prioritize financial literacy. Our educators and legislators can prioritize financial literacy in the classroom. Meanwhile, each of us can take the responsibility to discuss financial matters in our home.
In short, we can all pitch in to help our children, young adults, and mature adults become more financially savvy—so that we can all make sound, smart financial decisions and achieve our own definitions of financial success.