Learning the Value of Money
Money Smart Week began as a coordinated effort of the Money Smart Advisory Council, a diverse group of more than 40 Chicago-area organizations working together to promote personal financial literacy. The Chicago Fed convened the Council's first meeting in July 2001, during which members agreed to share resources and ideas to achieve greater public awareness of the programs and services available in the city of Chicago.
Since then, much work has gone into raising financial IQs around America, in both adults and youth — all aimed at helping consumers learn to better manage their personal finances.
Speaking of America’s youth, according to one of Money Smart Week’s studies, “Children as young as three to five years of age are developing the basic skills and attitudes that lay the foundation for later financial well-being.”
This is an encouraging concept, especially when you think of how parents of young children can help nurture this through educational play that involves the concept of money and its value. Earning, saving, shopping, and planning can all be simple ideas that bolster a strong sense of financial responsibility in children.
And while one might be forgiven for thinking that financial literacy is exclusively an issue with young people and students, the National Foundation for Credit Counseling’s Financial Literacy Survey revealed that 41% of adults gave themselves a grade of C, D or F regarding their knowledge of personal finance.
This is a disturbing statistic. That’s almost half the adult population who are poorly educated when it comes to managing money.
And it’s not just how to balance your checkbook or set a monthly budget. In a Retirement Income Literacy Survey conducted for The American College of Financial Services last year, 80% of the respondents received scores of 60 or lower on financial questions about retirement. Just 20% received what amounted to a passing grade.
Experts are saying that the problem may be with the timing of education. Where previously the bulk of financial learning happened at the high school level, but the school of thought now is that this is either too early or lacks enough practical real– world application for the education to stick.
Which makes sense. Most high school graduates are thinking about what parties they’re going to during their summer break or what college they’re about to attend. Why on earth would they have any use for mortgage information, or understanding their employer– matched 401k, or what the best way to set up a retirement savings fund would be?
The key is making it an ongoing educational process, with an ever-increasing capacity for financial concepts, and raising one’s financial I
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