Financial literacy is the ability to understand how to make
sound financial choices so that you can confidently manage your money over the
course of your life. The full breadth of financial literacy includes a wide
array of financial skills, ranging from the basics (such as setting and
maintaining a budget and properly managing credit cards) to the more complex
(things like navigating tax regulations or diversifying investment portfolios).
Developing these skills from an early age is a crucial step
on the path toward financial security. When you're financially literate, you're
able to allocate your income toward various goals simultaneously—not just to
ongoing expenses, but to savings, debt repayment and rainy-day funds. You can
navigate the financial marketplace with self-assurance, and you have the tools
to thoroughly research anything from loans, to credit cards, to investment
opportunities.
Unfortunately, however, a host of recent studies show that
far too many individuals and families across the country and around the world
struggle with basic financial education.
According to Standard & Poor’s Global Financial Literacy
Survey, less than 60% of American adults are considered sufficiently
financially literate. The National Foundation for Credit Counseling found that
just two out of every five American adults know how to set a monthly budget. A
study from the Financial Industry Regulatory Authority (FINRA) Foundation found
that more than half of Americans admit to being “financially anxious.”
Clearly, the widespread lack of financial preparation is a
major problem that needs to be addressed.
The question is: Where do we start?
At Navigant Credit Union, we’ve made financial literacy
education a focal part of our community outreach efforts here in Rhode Island.
While we certainly haven’t found all of the answers, we are proud of the
difference our team has been able to make in the financial lives of our members
and neighbors.
Here are a few lessons we’ve learned along the way.
Financial literacy is a life-long journey.
Through our partnership with EverFi, Navigant Credit Union
is bringing proven, student-friendly financial education curriculum into local
classrooms. Our program has reached more than 4,000 students across Rhode
Island, who have completed more than 30,000 financial literacy modules and
logged more than 22,000 hours of learning.
Programs like this are so important because the financial
literacy educational journey can and should begin at a very early age. Young
children may not need to worry about credit scores or learn how to file a tax
return before they reach kindergarten, but that doesn’t mean they can’t start
the process of familiarizing themselves with the basics. Something as simple as
teaching a child how to save up their allowance for a new toy can put them on
the right track toward developing financial skills they’ll use as they’re
growing up.
Individuals of all ages need access to financial
education resources.
Financial literacy is not an issue unique to any age group.
Whether you’re a child hoping to save an allowance for a new game, or an adult
hoping to squirrel away cash for a milestone purchase like a home or a car, you
need to know the basics.
There are plenty of free resources available to help people
of all ages navigate their financial journeys. Navigant Credit Union offers
dozens of free modules on our online Financial Wellness Center.
Finally, it’s never too late to start.
With national credit card and student loan debt trending
toward all-time highs, it’s easy for individuals and families to feel as though
it’s too late to learn these skills. It’s important to emphasize: This simply
isn’t true. With the right preparation and access to the right tools, past
financial mistakes or oversights can always be rectified. Low credit scores can
be improved, and high-interest debt can be paid down.
And most importantly, financial dreams can be realized.
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