A number of well-respected financial sources, including research papers, studies and surveys indicate that individuals and households whose level of financial literacy is highest have the greatest amount of wealth and economic security. I find in my work as a financial educator that populations with the lowest level of financial literacy have the lowest level of financial assets and limited economic security.

Teaching and training

The great majority of U.S. schools have determined that their main role is to provide students the knowledge needed to acquire a job instead of teaching skills to manage or maximize the income generated from those jobs. A holistic approach to education is necessary because too many Americans are managing their financial resources by chance or luck. Often the financial decisions made by individuals who lack financial education have negative consequences that impact their lives for many years, causing unnecessary depletion of financial resources from households week after week, month after month and year after year.

"Increasing one’s financial literacy can yield economic security, which can eliminate the financial stress that leads to other socio-economic problems that have a negative impact on society."

It is important to increase the financial literacy of Americans because this knowledge offers individuals and families the opportunity to enhance or maintain their long-term financial well-being and economic security. In fact, raising the level of financial literacy of Americans allows everyone to participate in a broader spectrum of the American economy and creates a more stable and robust marketplace.

Moreover, increasing one’s financial literacy can yield economic security, which can eliminate the financial stress that leads to other socio-economic problems that have a negative impact on society. This statement is further amplified by a recent study that indicates that financial stress leads to bad financial decision-making such as acquiring too much debt in the use of available financial resources and in other matters such as divorce that are detrimental to one’s financial well-being or economic security.

I am a strong advocate of face-to-face financial literacy training. Such training offers the opportunity to engage individuals directly to address immediate financial concerns, while also providing directions and solutions to help individuals to maximize their financial resources.

Knowing the facts

The roads that lead to economic security are discovered by increasing one’s financial knowledge on the path to financial growth and using them correctly. Here are some of the keys to financial growth:

  • Knowing and understanding economic cycles.

  • Knowing, understanding, and being willing to act on your current financial situation.

  • Knowing how to use personal money management concepts, such as how to manage credit, budget, save and invest, establish financial goals and risk management.

  • Knowing and understanding two fundamental concepts—present value and future value of money.

  • Knowing how to choose investments to suit financial goals and life stages. Knowing what tax deductions are available and determining their monetary value.

  • Knowing your financial, savings and investment goals.

Each day we make financial decisions consciously or unconsciously, and how

we approach those decisions have a tremendous impact on our ability to maintain economy security, which is the endgame. Therefore, it is imperative that we acquire the financial knowledge and skills needed to make informed financial decisions regarding the use of our financial resources.