What is Financial Literacy and how do You Achieve It? Financial literacy is the ability to use knowledge through education and skills to manage one's financial resources effectively and use as a tool for an individual to make better choices on important subjects like investing, debt, budgeting, purchasing, and or anything that associates with money. Financial literacy assists the individual to make their own and sensible financial decisions. So what happens to those that are not educated or financially literate? The results can lead to poor financial decisions creating debts, poverty, psychological stress, health issues, and perhaps ruin relationships. Olivia Mellan, a psychotherapist, and money coach describes in her article …show more content…
Let’s explore a story by Pam Fessler a veteran journalist in the economic field with 30 plus years of experience describing a story about Dametra Williams on “Making it in the U.S.; More than just hard work” (Fessler). Williams is forty, currently a business owner, black, and a single mother of one. She grew up poor in Texas and was never presented with an opportunity in education or advice on financial products while growing up. She spent years being broke and was homeless for a period of time. Mark C.Schug and Eric A. Hagedorn stated that “financial problems is more serious for the minority population due to a lack of financial education” (Schug and Hagedorn). Williams spent years not having an education or being financially savvy, but fortunately, her daughter of college age was accepted to 18 different colleges on a scholarship. Williams couldn’t be any happier as she understands education plays an important role in financial literacy and one’s pay related to different levels of education. Mark C. Schug and Eric A. Hagedorn acknowledged that “someone with less than a high school diploma makes four times less than someone with a doctoral degree and also five times likelier to be unemployed”. (Schug and Hagedorn). These are lopsided ratios, but it’s very true. Someone with a Master’s degree median income weekly is $1,300, compare to someone with less than a …show more content…
Financial literacy is one of the biggest factors that people lack in, especially minorities. If the educational system added a mandatory financial course as part of the curriculum starting in perhaps fifth grade. We would see an increased financial literacy among individuals at an early age. Most minority kids learn from their parents about finances, but are they the best teachers if they themselves might be in debt while living paycheck to paycheck? Once upon a time, if I had a million dollars, I will shower the ones I love with gifts, spend lavishly on dream vacations with close friends, and buy materialistic items such as sports cars and luxury brand name clothing as an announcement to everyone that I have money. This was my philosophy five years ago when I had no idea how to manage money. In layman’s term, I was financially illiterate. Fast forward to today, if I had a million dollars, the first thing to do is to pay off all my debts so there will be no interest accrued. Then, investing in stocks, real estate, commodities and a business would be ideal. I now understand the financial aspect of things due to the Army implementing some mandatory financial courses during my transition out of the Army. How does this affect you and me? It’s simple, we live in a democratic country so we pay for people’s poor financial judgment using our taxes to support government programs assisting
Since the word “literacy” is usually used to describe the measure of one’s ability to read, write, and speak a specific language, financial literacy can, thus, refer to:
Education is tool that benefits anyone, regardless of social standing, race, or religion. A government’s denial of an education that would encourage prosperity and security among its people is the rejection of a conscious society, and the promotion of an ignorant, incapable populace. The argument over teaching financial literacy classes in school is no exception to this problem. Financial literacy is knowledge, and a tool that nearly every American will use to succeed in everyday life. The lack of literacy in any subject is wrong, but not educating Americans about the power of money and debt will only hurt our country in the long run. In a world where money is power, why should we not give all Americans every advantage we can? Financial literacy
There are also other external economic factors that would have an impact to an entity, but having financial preparedness would enable the entity to cope with the situation. Being financially literate, even under different economic factors, would allow for more options in taking certain courses of action appropriate for the situation. The organizational financial literacy, having been gained, would also reflect the entity's capabilities, strength and competitiveness. This having sufficient financial literacy would aid the organization in keeping up with the economic
In their article, Owen and Sawhill appeal to ethos by comparing statistics on college graduates’ income to the income of those who did not attend college. One figure Owen and Sawhill present is “research shows that 23- to 25-year-olds with bachelor’s degrees make $12,000 more than high school graduates but by age 50, the gap has grown to $46,500”(641) They
Financial problems, however, exist not just for those in poverty; only around 20% of those with financial problems are considered in poverty. Personal finance affects every individual and becomes a great burden if one does not understand all that makes it up. One such burden is debt, chiefly credit debt and student loan debt; as of 2017 around 67% of Americans have credit debt and 17.5% have student loan debt, and worse the number of those who have failed to make a payment has increased (Personal Finance Statistics, 2018). Personal finance is the process by which one manages their money and financial decisions. It affects every individual throughout their life and should be understood as to make one’s situation better or to prevent any trouble. The main categories that fall under personal finance include student loans, credit, retirement, and housing; each of which possess certain aspects that if not fully understood or explored could lead to financial
The general statement made by Annamaria Lusardi in her work, “Should colleges require a financial literacy class? YES: Ignorance carries a high price”, is that personal finance class is essential for college students to be successful beyond graduation. More specifically, the writer argues that students who with little knowledge about how the finance works often in time end up with in debt even before they enter the real world of survival, because they have no idea of the complex system of finance. Lusardi states, “Our analysis of the latest National Financial Capability Study, or NFCS, finds that more than half of millennials take on student loans without even attempting to calculate what their payments will be.” This passage is suggesting
College gives its graduates the greatest ability to achieve a higher paying job. Furthermore, adults who attend college earn higher wages over those who do not. As emphasized in “College Grads Find Big Degree of Debt, Difficulty; American Families Start to Wonder Whether Education Cost Is Worth It” by Patrice Hill, a staff writer for The Washington Times, employees who have a bachelors degree earn an average of 84% more than people with only a high school degree. In accordance with these numbers, the results of a study conducted by the Treasury and Education Departments in 2011 show that college graduates with full time jobs earned 64% more per week than high school graduates. A similar study conducted in 2013 showed that a full-time worker with a bachelors degree earns 79% more than one without a college degree (Hill). There are numerous studies that verify that people who attend college earn higher wages. Furthermore, college graduates earn more desirable jobs. As Justin Draeger, CEO of the National Association of Student Financial Aid Administrators, states in his article “College Is Still Worth the Expense”, the U.S. government classifies jobs in zones one through six. Lower work zones pay the least and are full of non-college graduates. The highest zones pay the most and are filled with college graduates. According to the US government, the median pay for job zone thre...
Once attained, a college degree will enable individual to earn more in the long run. In fact, the rate of return on investment in higher education is substantial enough to warrant the financial burden often associated with the pursuit of a college degree. On the whole, college graduates earn more than those with only a high school diploma. According to the National Center for Education Statistics, the median annual income in 1999 of male high school graduates working full-time and year round was $33,184 and $23,061 for female-full-time workers. However, the average incomes in 1999 for males with a bachelor degree were $52,985 and $37,993 for females. This demonstrates the drastic disparity in earnings between individuals with college educations and those with only high school diplomas. The U.S. census Bureau has determined that each successively higher education level attained is associated with an increase in earnings. Over an adult 's working life, high school graduates earn an average of $1.2 million, those with associate degrees earn approximately $1.6 million, and individuals with bachelor 's degrees earn about $2.1 million. When the necessary financial burden of pursuing higher education is put in comparison to the differences in wages related to level of education outlined above, the true economic value of college education is certainly put into perspective. Moreover, higher learning leads to higher earning. Beyond increased income potential, graduates from college educations also experience several other benefits compared to those with only high school diplomas. These benefits include longer life spans, better access to health care, better dietary and health practices, greater economic stability and security, and less dependency on government assistance. College education has also been linked to greater use of seat belts, more continuing education, greater attendance at live performances,
Making improvements on our financial literacy results in a wave of impacts on our economy and the financial health in our society because of responisble behiavior with our finances. These modifications to our behavior are neccesary because it let's us address primary cultural problems, for example over-credits on your purchases, mortgages possibly resulting in debt, dealing with expectations on inflation and also planning on your retirement.
Parents may not feel comfortable enough with their own financial situation to discuss personal finance with their children (Williams, 2009). Additionally, the parents, or other influencers, may not have a full grasp of certain concepts of financial literacy. In an article by Carlin and Robinson (2010) it was noted that “many retirement-age adults lack the financial literacy to understand the basic features of their retirement plans.” Financial literacy through socialization and practice may not be enough for students; whether it be “disadvantaged” youths who often lack a high quality of life at home, or youths whose parents have stable jobs with retirement
Applying for loans, balancing a checkbook, or filing taxes. If a high school senior heard those words, chances are they wouldn’t know what they were let alone how to accomplish them. The lack of financially literate young adults is becoming a major problem in America and can affect today’s youth for the entirety of their life. How to pay for college, saving for one’s family’s future, or planning for retirement are all things that most people will face in their lifetimes, and few know how to successfully accomplish these. This is why high schools should incorporate financial literacy classes into their curriculums so that young adults can be more prepared for life, long after high school.
“In fact many Americans are not fluent in the language of money” according to Greg Burn; that explains why many people throughout the world are bankrupted or in extraneous amounts of debts. Many Americans do not grasp the concept of budgeting or why it is important. According to Tara B Siegel Bernard, “good budgeting has to be maintained throughout a person’s life no matter the income, no
High school seniors takes deep breaths and parade onto the stage. The beginning of a new chapter awaits as they make the journey from one point of the stage to the end. They reflect on what they have been taught in those many years of high school. The most terrifying fact while graduating high school is the next step: making it on their own. Because they have taken part in the appropriate classes, the students are certain that they have gained the correct knowledge to begin making their mark on the world. In high school, it is crucial to achieve the appropriate classes in order to feel ready to take on the world ahead as an adult. However, many students lack proper education. One key example is financial literacy. Financial literacy is the
However, studies show a positive correlation between education levels and income intake. According to a recent post from the National Center for Education Statistics, “…the median earnings of young adults with a bachelor's degree were 57 percent higher than those of young adult high school completers ($31,800)” (National Center for Education Statistics). Studies also confirm that with each degree of educational level, comes a significant increase in income earned. A college education appears essential to earn more money, throughout one’s life
Financial Literacy is the ability use of knowledge and skills to manage financial resources effectively for a lifetime of financial well-being. Financial literacy is very important when it comes to receiving funds or making money. When it comes to having money you have to know how to manage it. If a person does not have these skills, they would not be able to save their money or use it wisely. If I was to receive the Grant-Aid it would help me enhance my financial literacy by being able to manage my expenses, learning how to budget and save, and learning how to invest in the important things.