April Is Financial Literacy Month – Does Anyone Really Care?

Yes, April is financial literacy month and here and there in the media you’ll see references to April being financial literacy month. There will also be another(6th) annual Financial Literacy and Education Summit at the Chicago Federal Reserve again this year, among other scattered recognition activities around the nation, but outside of a few interested parties, does anyone really care about financial literacy and, if not, why not?

It seems to me that financial literacy and the whole subject of financial wellness just does not get its due, especially in light of the serious personal finance problems faced by U.S. citizens over the past few years, and the uncertainty about once-stable institutions such as Social Security, Medicare, and corporate pensions.

During the recession, many found themselves overextended on mortgage loans they shouldn’t have taken in the first place. Home values dropped and they continue to decline today. Credit debt reached soaring heights and large numbers lost their jobs and, outside of unemployment compensation, few had additional resources to sustain them. And the importance of retirement savings hit home for the first time for many, as retirement accounts were depleted by multiple thousands of dollars; causing many retired people to bail out of the market at its low point. Yes, for the first time, many U.S. citizens got a good taste of what a “great” recession can do in terms of devastating personal wealth.

You would think any nation that just went through what we’ve been through would do a thorough examination of the matter and put safeguards in place to ensure any similar problems in the future would be handled by its citizenry with greater knowledge and skill. Certainly, one could quickly conclude that a good foundation in personal money management would be beneficial to anyone that would have to face the challenge of another recession, or just the challenges that go with managing one’s day-to-day personal finances in our erratic financial world. A natural jumping off point, it seems to me, would be to take quick action to bring personal finance training into our schools, so the next generation might be better prepared to deal with their personal finances and/or the next great calamity.

Unfortunately, according to the 2011 Survey of the States, a survey that reports on the state of economic and personal finance education in our nation’s schools, only 22 states require an economics course for high school graduation and only 16 of those states require testing in economics; 3 fewer than in 2009. The number of states that require students to take a personal finance course is just 13. The survey reports that in schools where financial education is required the students were better savers, were less likely to max out on their credit cards, were less likely to be delinquent on their credit card payments, were more likely to pay off their credit cards in full each month, were less likely to be compulsive buyers, and were more willing to take average financial risk.

The survey also showed that the average college student in the U.S. had $25,250 in student loan debt at graduation in 2010; up 5% from 2009. And the last time I looked at this statistic, graduating seniors were carrying 4 credit cards on average.

Information like this related to the limited financial training we provide for our students, in light of the myriad of financial problems this country has experienced, leaves me with the feeling that, outside of a few, we as a nation are only willing to give the subject of financial literacy lip service and not serious consideration. We’re not willing to invest the money necessary to grow our financial education programs, nor are willing to make mandatory, with few exceptions, the requirement for developing critical lifelong personal finance skills.

With our students not getting the financial education they need, they go into adulthood without important survival skills. We allow them to go on to become adults and fall into the many financial pitfalls that await the uninformed and unskilled.

Well, you might say, the parents should be providing their children with financial education at home. Well, the parents generally don’t, no more than they provide home training in physics. Remember, few of the parents ever had any formal training in personal finance matters. This training will generally have to come from competent, qualified educators in the schools or the child’s adulthood will likely be a matter of learning from the school of hard knocks.

All too often it’s the school of hard knocks that wins out as there are volumes of information out there that speak to the financial distress adults feel, because they either don’t have the skills or interest in keeping their personal finance houses in order. For those that lack the skills, but feel the heat that goes with being a poor money manager, financial stress is often the order of the day; stress, which if not checked, can contribute to disease. Personal finance problems are also linked to many social problems; not the least of which is divorce. We know that the number reason for divorce is money.

In last year’s MetLife 9th Annual Benefits Study, this was the conclusion reached about the link between financial stress, healthcare, worker productivity and the achievement of business goals:

  • “The recession has resulted in widespread financial insecurity across all employee age groups. In fact, there is a virtual “epidemic” of financial stress, and there is compelling evidence that “financial illness” also contributes to health care costs, as well as to reduced productivity”.
  • “As much as employers have been focused on traditional health and wellness, there is compelling evidence that “financial illness” also contributes to health care costs, as well as to reduced productivity. Employee financial security may be a major driver in accomplishing business goals”.

Based on these conclusions from MetLife, surely you would expect employers to be taking an aggressive stance and bringing in personal finance training for those many of their employees that never had the opportunity to receive training, but it appears little is being done in the workplace to promote financial wellness. There are a few progressive leaders out there that are introducing financial literacy/wellness programs in the workplace, but this is a limited group of employers.

With 70% of Americans living paycheck to paycheck today and the lessons learned from the 2008-2009 recession, you’d just think we’d be doing a lot more now to make sure we handle the next challenge better than we did in the past, but I’ve yet to see that happen. So, have your April Financial Literacy month this year and next year and the next year, but does anyone really care?