Every U.S high school student learns basic chemistry and trigonometry -- courses that aren’t necessarily helpful to the daily lives of most Americans. Aside from trivia nights, my knowledge of the periodic table has never come in handy and no one has ever put me on the spot about the law of cosines.
What is essential to the everyday life of Americans is often missing from school curriculum, namely the principles of financial literacy.
“We have an entire generation if not several generations who have grown up with the belief that finance should be in the hands of the experts,” says Heidi Moore, U.S. finance and economics editor for The Guardian. “So they’re signing documents, mortgage documents, loan documents, credit card documents, without knowing fully what the implications are or even how to begin to read what they’re signing.”
Financial literacy is more important than ever, says Moore, not just because it’s an essential skill in managing a healthy financial life but also because we’re just now crawling out of an economic crisis largely based on a lack of knowledge about mortgage loans.
According to a 2013 study conducted by the National Foundation for Credit Counseling, 40% of American adults would grade themselves a C, D, or F for their knowledge of personal finance. Nearly one-third of adults reported they have no savings, according to the same study.
A report by the National Financial Educator’s Council shows that the average youth financial literacy test score was just 58%.
Ninety-six percent of college-bound high school seniors would have made different student loan decisions if they had received a financial education that helped them understand repayment terms.
Moore says the lack of financial literacy costs Americans billions of dollars, if not more. “If you’re talking about a country of 330 million people, 47 million of whom are on food stamps, you’re really talking about a significant portion of the U.S. population that could do better, and that’s even before you get to the middle class and before you get to the lawyers and doctors who are high earners but easy targets for stock scammers.”
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