Financial Literacy: Best way to do it, is to do it.
Ms. Sandy Wheat is the current Executive Director of the North Carolina Council on Economic Education.
Writing in a recent guest column in the Triangle Business Journal, Sandy Wheat quotes Amelia Earhart’s famous quip that “The most effective way to do it, is to do it.”
Likely, Ms. Earhart was referring to aviation; however, as Ms. Wheat concludes in her op-ed the same principle holds true for financial education in her state of North Carolina as well as in the rest of the nation.
Even as the U.S. economy continues its gradual climb out of the Great Recession pit, Financial Education and Literacy remains a pressing issue for U.S. education. Without overly simplifying the causes and perpetuating circumstances that enabled the Recession, American’s lack of financial literacy (i.e. not understanding the risk of loans, taking on credit card debt, no viable budgeting or savings programs, etc.) is at least parallel in responsibility with those other causes.
Given that this is true, then one of the easiest ways to prepare against the next recession is by effectively equipping young Americans with financial literacy.
Ms. Wheat writes that a “recent study found that young adults in three states with a financial education requirement had higher credit scores and fewer credit delinquencies than students in nearby states without.” This is significant news not just for those students but also for the financial and economic institutions of the U.S. It underscores the fact that financial education works.
Ms. Wheat cites a study from 2012 that reveals that while 83 percent of teachers in North Carolina believe that financial education is essential, almost half of those teachers fear that their own financial literacy is too inadequate to be able to teach it.
Unfortunately, even if state legislatures make financial education a requirement, teachers themselves feel as though they are unable to teach.
A byproduct of the Recession has been the tightening of state budgets and in many states, education budgets are the ones getting slashed—meaning that there is little chance for teachers who struggle in financial literacy to even be able to get the training they need to teach.
Thankfully, many private financial institutions are stepping up and volunteering money and personnel to non-profit organizations like the Council for Economic Education which offer numerous teacher conferences, financial education curriculum and resources, connections, and more to both teachers and students across the country.
Basic economics states that people, consciously or otherwise, make all decisions based off of a cost to benefit analysis. Because resources are scarce, businesses very consciously conduct all of their transactions and investments with the idea that what they are investing in will in the long run make them more profitable.
To see these same businesses investing in financial literacy education for teachers and students should illuminate for all critics the importance and value in giving the next generation of Americans the gift of Financial Literacy.
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