THE BLOG

Financially Speaking -- Are We an Illiterate Nation?

04/02/2014 06:33 pm ET | Updated Jun 02, 2014

It is a constant source of amazement to me that in the United States, arguably the center of the capitalist system, we fail to educate much of our youth in the most rudimentary of macro and personal economic principles.

Financial literacy, which I would define as: A sound knowledge of the basic underpinnings of our economy along with personal financial skills including budgets, checking accounts, saving and investment options, credit, interest rates, credit reporting agencies, credit scores, revolving credit, mortgage and installment loans, secured and unsecured credit, liens, chattels, and garnishment and taxes (state, local and federal). Additionally, I believe financial literacy should also encompass insurance: auto, life, health, health accident, whole life, term life and the various credit insurance products available in the market place.

Those volunteering for military service are given basic training before being sent into battle. Can anyone argue that the basics of real-world survival, such as buying a car, buying a home and the plethora of financial transactions we encounter each day of our lives, are unworthy of being taught to our children? Shouldn't your child have some basic preparation for life's battlefield?

Here Are Some Facts

Champlain College's Center for Financial Literacy released its '2013 National Report Card,' which quantifies what states are doing to promote financial literacy in the classroom. Only seven of 50 states surveyed came away from the study with an "A" rating. That's right, a paltry seven states! Of these seven states, only four have a standalone course -- Utah, Tennessee, Missouri and Louisiana.

Thirteen states received a "B" rating, and the remaining 30 states received a "C," "D," or "F" rating. In fact, eight states received an "F" rating. Ask yourself, as a parent, would you be content to have your children bring home similar grades?

Finding funds for our public education system has never been more difficult than it is now. I get it! We have all heard the stories of music classes, art classes and athletic programs falling under the budget axe. Parents rise in collective dismay and demand they be reinstated, but most never give a moment's thought to plunging their sons and daughters into the most complex financial system the world has ever known, absent a decent grasp of the way it all works.

What Are The Consequences?

The consequences are heartbreaking. Young adults abusing credit cards, spiraling into debt, losing their homes, cars and all too often their marriages as a result of, well ... financial ignorance. Hyperbole you say? Not at all! Fifty percent of marriages in the United States fail. Of that 50 percent, fully 80 percent cite financial problems as the leading cause of the breakup. Consider that through September 30, 2013, 1,107,699 bankruptcies have occurred, and we are on track to see more than one-half million foreclosures by the end of the year. Credit card delinquency is at a low level, historically speaking, but this is largely because so many of us are dependent on credit cards as a source of financial liquidity, which is tragic. Liquidity should spring from savings and investment ... not debt.

We push our children to go to college, get a degree and earn more money (in theory), yet we fail to demand for our children basic instruction in our schools on how to best employ those earnings in their day-to-day lives.

Wake up people! The future financial well-being and happiness of your kids is at stake.

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