Why Financial Literacy Should Be Important to All of Us

by Sean Bryant on April 17, 2013

Financial LiteracyWhen you were in high school, you undoubtedly took writing classes or classes that taught you about American history. Some of you may have even taken a class that taught you how to cook. But, I am guessing not many of you took a class that taught you about personal finance and how to manage your money properly.

One of the biggest aspects that is missing from public education is the ability to become financially literate. This is also beginning to have severe effects on us as a country. The average American household has over $15,000 worth of credit card debt. This could be much less if we were taught money management from an early age.

When I was in elementary school, my first real memory of money was that every week a local neighborhood bank would come and set up a makeshift bank in the schools library. Not only would we have the opportunity to deposit our money, but we would also get the chance to act as tellers. This allowed us to learn about the benefits of saving money first hand, as well as what takes place on the other side of the teller’s window.

After that, my run-ins with personal finance were pretty much nonexistent outside of reading my Dad’s Wall Street Journal every morning. If it weren’t for the fact that I was an economics major and took quite a few finance classes, I wouldn’t have had any knowledge of  finance topics. As far as I am concerned, this is a major issue for the future. Without adding personal finance oriented classes to high school curriculum and making it a prerequisite in college, we are sending 20-somethings out into the real world unprepared.

To allow every generation to be as successful as possible, we need them to be knowledgeable when it comes to basic finance. They need to learn how to create a budget in order to make sure they are not spending more then they are earning. They need to understand the importance of setting up an emergency fund, just in case they ever need a little rainy day money.  Most importantly, they need to learn the psychological effects of being in debt, so they never end up there.

By educating our future generations we will hopefully be able to arm them with the tools to change the course of rising debt, and who knows we might even prevent the next financial crisis.

What is your first memory of money when you were a child?

I want to thank my friend Shannon because in honor of April being National Literacy Month she has put together The Financial Literacy Awareness Carnival. You can check out the rest of the articles included by visiting The Heavy Purse.

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Sean Bryant

Sean Bryant created OneSmartDollar.com in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and he wife are avid world travelers. He enjoys spending time with his daughter Colette and dog Charlie.
  • “By educating our future generations we will hopefully be able to arm them with the tools to change the course of rising debt, and who knows we might even prevent the next financial crisis.” Amen brother! Preach on!

  • Laurie @thefrugalfarmer

    Love what you said here Sean about teaching people the psychological effects of being in debt. This may well be one of the most important aspects of financial literacy. So many times people just whip out the credit card and think of it as free money and a way to happiness, not realizing the psychological stress they’ll be left to dealt with later.

    • Thanks Laurie. I think it is extremely important to understand the consequences involved, because that will make them think twice before making a purchase they can’t afford.

    • So many people think they can buy happiness with stuff. And for a split second it does, but it fades fast because it’s not true happiness. I agree that if you want to curb mindless spending, you have to confront why you do it.

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  • Great one Sean. We are failing our children when we don’t teach them about the proper ways to handle money. This needs to be taught in school. It is just a fact.

    My greatest money memory when my parents made me purchase a Super Nintendo system when I wanted it. I had to save and work for the money and it was a great lesson.

    • Right there with you Grayson. One of the best financial lessons a parent can give is making you save your money to buy something. It makes you feel rewarded.

  • That is really awesome that your local bank did that in your elementary! I couldn’t agree with you more about financial education needing to start early and continue on through college.

  • Erin (aka BrokeMillennial)

    I agree, Sean. We desperately need to cultivate financial literacy in schools, and it isn’t just public schools failing to teach those lessons. Granted, I didn’t go to high school in America, but neither of my fancy-pants private international schools overseas had required economic classes. Economics was only offered to kids in the IB program who wanted to be business majors in college.

    Home ec and cooking classes would also be great additions to a financial literacy program too. They may be viewed as fluff courses, but they teach ways to save money!

    • A change definitely needs to be made and until it’s done we are going to continue to head down the same path as a nation. Probably doesn’t help that our own government lives beyond their means. 🙂

  • The makeshift bank sounds like a great idea! I can’t recall any classes I took that even touched upon money, in elementary or high school (unless you count Accounting). But no lessons about saving our own hard-earned money. And I wish they did. But I also think behaviour and attitudes towards money, are not something that can be easily taught in school. A big part of it, is reliant on us as parents, to do our part and set a good example for the future generations. Good post!

  • When you look at the state of the world today – a lot of problems stem from a lack of financial knowledge. It’s time we step up as parents and in our school system to make financial literacy a priority. It boggles my mind given that every single person uses money and makes decisions around it every single day that personal finance is not a required course in school. Yes, I want parents to teach it at home and model good financial behavior, but they also need to learn it school too, especially for those kids who parents can’t or won’t teach them. We are sending young people into world unprepared and they are our future leaders. They deserve better and so do we.

    You bring up a great point about the psychological affects of debt too. It weighs so heavily on people – I see it every day as a financial advisor. I am also fortunate enough to see it fade away when they take back control of their money and eliminate debt.

    Thank you, Sean, for participating and sharing your story. I really appreciate it.

  • I agree that more needs to be done in the education system. As much as we want all parents to teach their children which would be optimal many are not in that position. I learned from my parents but only because they were just as nutty for numbers as I am now. Cheers

  • Wow. Kudos on being able to read the Wall Street Journal every morning as a high schooler 🙂

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