The significance of financial literacy



Prevent financial mistakes by acquiring basic knowledge on how to make, save, and spend money.  

Esai Hernandez, Contributing Writer

An individual who possesses the knowledge and ability of incorporating wise and secure financial decisions is known as being “financially literate.” Financial literacy can allow individuals to not stress or worry about their finances. Many people are not properly educated on financial literacy as they are attending school or growing up. There are many parents and guardians who tend to avoid discussing their financial situation with their children because they do not want to cause any unnecessary stress or anxiety towards their child’s well-being. If more children and teens are educated on the importance of financial literacy, then there will be less debt within the U.S. Additionally, our youth will learn how to properly budget, invest and save their finances.  

Many people have lost their jobs during the pandemic and have struggled to live comfortably due to a lack of income. There are still many adults who are worried that they will never be able to pay off their school loans. Furthermore, there are many single parents who are working multiple jobs to provide for themselves and their children. People need financial literacy more than ever. It’s crucial to learn effective strategies that are capable of improving one’s financial journey. You don’t have to be wealthy or an adult to learn how to properly manage your finances. Many schools are not educating our youth on financial literacy and that is a significant problem. 

In 2021, a Greenlight study revealed that there are many teens who feel that their financial education is not strong enough. This study “found that nearly 3 out of 4 teens find their financial literacy to be lacking.” A study from the American Psychological Association highlights how there are many adults who believe their finances take a toll on their mental health and cause stress. The study states that “64 percent of all cults assert that money is a significant stressor, more so (73 percent) for people with a household income of under $50,000.” JPMorgan Chase distributed an analysis that demonstrated an alarming number of families who do not have enough money saved in the event of an emergency. This analysis stated that “… about two-thirds of American families would struggle to come up with the equivalent of six weeks’ savings.” Each of these studies emphasize the significance that financial literacy can have towards an individual’s quality of life. 

Nonprofit organizations, such as My Money Workshop, are attempting to raise more awareness towards financial literacy. Established banks, such as JPMorgan Chase, are advertising that they are willing to help others work towards their financial goals. They are also participating in projects that can help educate others on the importance of being financially secure. Many organizations are attempting to raise more awareness towards financial literacy, but there is a great amount of work that needs to be accomplished. There is an alarming number of people who are homeless and living in poverty within the U.S. Being financially literate can save many futures and lives. 

In short, there are many people in debt, homeless or in unfortunate situations due to a lack of knowledge on how to intelligently spend or manage their finances. There are also individuals who need assistance on how to properly manage their finances, but wait until they are massively in debt to attempt to learn secure and wise financial strategies, such as budgeting. More individuals, especially college students, should strive to learn effective methods and strategies that could help improve their financial situation or journey. It’s a shame that there are so many individuals who live in fear that they may not be able to afford a decent meal or beverage. Financial literacy can help solve so many issues within today’s world.