Unfortunately, this a question being asked by young adults – well, adults in general… parents and grandparents included. Although it should be, financial literacy is not a course in most schools. When considering the need for financial literacy, I am reminded of this:
“What you tolerate today, you will accept tomorrow. What you accept today, you embrace tomorrow. What you embrace today, you promote tomorrow.” —Hillary Morgan Ferrer
Truth be told, we are in dire need of a cleanup on isle 9. Doesn’t it seem that every financial effort being made right now is reactive rather than proactive? Think about it… why is Dave Ramsey such a popular household name? He is Mr. Clean himself.
We are living within a system that, at the very least, has accepted financial illiteracy…. maybe even embraced it. The bottom line is that this has to be corrected, but the question is how?
“The most important work you will ever do will be within the walls of your own home.” –Harold B. Lee
We expect to send our children to school in hope that they will learn most of everything they need to know to become productive citizens in society. However, there is a key component missing. And this means it is up to you to fill that gap. If you want your children to be successful on every level, it is foundational to help them learn how to secure that success from the very beginning.
You don’t necessarily need to enroll in a big fancy course. Much of financial literacy stems from an understanding of the basics. Following is a list to jumpstart anyone in their financial literacy journey. Ask yourself these ten questions. Maybe this is for you or your children. Maybe it is for a friend or your youth group. It doesn’t matter. The questions are the same.
- Do I know how to keep a budget? What is an emergency savings?
- Do I know how to keep a check ledger and balance a checkbook?
- Do I understand how credit works and how to get and keep good credit?
- Do I understand how credit cards and compound interest work?
- Do I understand home, renters, auto, and liability insurance?
- Do I understand interest rates and payments? An amortization schedule?
- Do I understand the time value of money and compound inflation?
- Do I understand how taxes work? When do I need to file? Where do I go?
- Do I understand the basic legal documents (Wills, Durable Power of Attorney, Medical Power of Attorney)?
- Do I know how health insurance works and if I need it?
Obviously, this isn’t a comprehensive list. However, 44% of Americans don’t have enough cash to cover a $400 emergency1. This means once you can answer and apply these ten questions, you have already potentially changed to course of the future for yourself, your family, and community.
Financial illiteracy is the elephant in the room, but the secret is it only takes a few peanuts to get that elephant moving. Start today and Be the change you want to see in this world! —Ghandi