Financial literacy is a lifelong commitment

Financial literacy is a lifelong commitment

2022-08-04T11:53:39-04:00August 4th, 2022|Banking & Finance, Charlotte, Economy|

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Writer: Jerrica DuBois

2 min read August 2022 — As the conversation increasingly surrounds higher interest rates and inflation, many are wondering what exactly that means for their own financial journey. Stocks, bonds, mutual funds, crypto — there are so many options that navigating personal finances has become a task that many people are no longer undertaking without proper advice and training, mainly because many do not have the financial literacy to understand what’s going on.

While the United States may be the largest economy in the world, opens in a new windowStandard and Poor’s Global Financial Literacy Surveyopens PDF file reveals that only 57% of adults in the country are financially literate. The sooner the better has become a rule of thumb for getting smart about money. 

“We’ve created a program where our training staff go into schools and hold literacy conversations to bridge the gap,” Steven Fisher, CEO and chairman of F&M Bank of North Carolina told Invest:. “Many people have never had banking conversations with their family. I think there is more awareness among younger generations but I don’t know if there is more ‘understanding.’ Technology has made financial institutions more accessible but we would like to provide education and not just access.” 

A good starting point is toddlers as they learn how to count. Early in their education, children gradually begin to understand concepts such as numerical value. By second grade, they are equipped to grasp basic principles about money. They learn that if they give this much then they should get this much change back. Children can benefit from instructive conversations, according to research from the opens in a new windowUniversity of Cambridgeopens PDF file on “Habit Formation and Learning in Young Children.” 

The responsibility to begin educating a child on financial concepts and giving them the opportunity to practice those skills, lies with the parent. Personal finance is not a requirement for graduation in many states, so schools cannot be relied on solely to teach young people the basics, much less more difficult concepts. Currently, opens in a new window14 states, including North Carolina, require some sort of personal finance education to get a high-school diploma.

According to a recent poll by the opens in a new windowNational Endowment for Financial Education (NEFE), nearly 90% of adults said their state should require, at minimum, a semester of financial education.  “Financial education unequivocally is the foundation for acquiring and applying knowledge, though we are transparent that education alone is not enough to overcome systemic barriers,” said Billy Hensley, president and CEO of NEFE in a opens in a new windowstatement. “Americans overwhelmingly recognize the importance of learning money skills at an early age and this poll reinforces there is demonstrated national support for personal finance to be a part of learning in all schools.”

But is a course or two in high school enough? Everything adults do centers around financial literacy, including earning money, paying bills and budgeting, retirement planning and even saving for that dream house. For college students and young adults, it’s even more important to have those financial tools as they prepare to face challenges, such as student loan repayments, and the reality that Social Security benefits for retirement are currently not guaranteed past opens in a new window2037.

The next generation is also making less money. Over the past 50 years, the income for the younger workforce has barely increased, according to a recent opens in a new windowPew Research Center study. So with less money, the millennials and younger have the additional pressure of possibly funding their own retirement. 

Financial literacy is especially needed during the transition into adult life. New challenges, such as mortgages, credit cards and taxes, can certainly cause angst if you have yet to learn the financial tools to manage them. As a way to help those with mounting debt, economists are encouraging companies to offer opens in a new windowfinancial wellness benefits instead of only relying on their 401(k) plans. People of all ages need financial literacy and businesses are taking note, establishing partnerships and offering programs for employees and the community at large. 

“We partner with a third party to provide financial literacy materials to our clients and have programs set up for education that can be in a group setting and one on one,” Ron Fleischman,

branch manager and executive director at UBS Wealth Management USA, told Invest:. “We also have services for different age groups. I think UBS has done a great job in providing the tools to our associates to offer that service to the community. Younger generations seem to be getting more involved in different ways. For example, trends like investing in cryptocurrency have evolved rapidly in the past few years. It is a good reminder of why financial literacy is so important, because there are always new things coming to the industry that we can educate people on.”