TMCnet Feature
May 09, 2014

Financial Literacy Is Down: Now, More than Ever, it is Important to Educate Yourself

A recent PEW poll revealed that the United States is lagging behind other countries when it comes to educating students about the basics of personal finance. The study said that there are only four states that require students to take some sort of personal finance course before they are allowed to graduate from high school. Worse, the study said that only 32 percent of students surveyed knew what credit card interest and fees were (and how they worked) even though two thirds of them insisted that they were financially savvy.

Another surprising fact is that, of those four states that currently require students to take personal finance courses before they graduate from high school, Utah is currently at the front of the race. CNBC even went so far as to say that Utah is the country’s “hub” for financial literacy. Adults scored the best on a basic personal finance test of five questions. Almost half of the adults surveyed got at least four of those five questions right.

This is disconcerting news, especially given recent identity theft and credit risks after the hacking of Target’s systems over the holidays.

Most personal finance planners and other experts agree that there are three major money topics that every adult should understand.

Budgeting 101

Knowing how to track the money you have coming in and going out is imperative to a person’s financial survival. The number of adults who do not know exactly how much they earn and spend is staggering. Yes, this probably seems like a monotonous chore but the reality is this: if you don’t know what you have coming in and going out, you are putting yourself and your family at risk for extended identity theft, bankruptcy and a slew of other problems.

How Credit Works

We are becoming increasingly dependent upon credit as a society. Today you have to have a credit card to book a hotel room, book a flight, rent a car, etc. Some businesses are making the move toward entirely “virtual” currency. For example, many Las Vegas casinos require gamblers to buy pre-paid “credit” cards to use in the machines (instead of funneling cash and coins as has been traditional). It is important that you do not look at “available credit” as “free money.” Interest rates, fees and all of the rest of those hidden charges are usually what trip up people and keep them in debt, not the actual purchases they are making.

How to Fix Credit and Debt Issues

Many adults think the only way to deal with excessive debt or problematic credit is to declare bankruptcy. Really, bankruptcy should only be the very last resort. If someone doesn’t trust his or her ability to repair their debt or credit issues themselves, there are thousands of different resources out there that will help that individual get back on track. Credit repair consulting agencies exist for a reason, after all!


Most people’s imaginations immediately jump to the stock market when they think about investing. Truthfully, though, investing is important if you don’t want to be forced to work every single day of the rest of your life. If you have any hope for retirement at all, you need to learn at least basic investing techniques. IRAs, 401(k)s, money market accounts, CDs, these all count as “investing.” Yes, you can do more but understanding the basics of saving and investing in your future is vital to your survival.

Yes, the current numbers about America’s financial literacy are dismal. With a little bit of effort, though, we can get the country back on track. Remember: help is always available if you need it!

Edited by Maurice Nagle
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