Achieving financial literacy means starting education early | opinion

Managing your finances can feel overwhelming. For many of us, learning important financial skills was not a part of our education.

That lack of financial education is costing us. A survey from the National Financial Educators Council shows that 38% of respondents say their lack of financial literacy costs them at least $500 last year. Eleven percent of people say it sets them back by $10,000 or more. A recent survey from Bankrate also found that more than half of Americans can’t cover a $1,000 emergency expense.

The results of these surveys aren’t surprising. The TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) is an annual barometer of financial literacy. In the 2022 P-Fin Index, survey participants answered about 50% of the basic money questions correctly. 23% of those who took the survey couldn’t answer more than seven of the 28 questions, the highest number in the survey’s history.

This lack of financial literacy doesn’t just impact your savings. Not knowing how to manage your personal finances can impact how much debt you take on, your credit score and even when you are able to retire.

Experts agree that one of the solutions to our country’s lack of financial literacy is to start educating teens before graduating from high school. The Jump$tart Coalition for Personal Financial Literacy, a group of more than 100 national organizations, spearheaded the effort to designate April as National Financial Literacy Month. The goal of Jump$tart is to advance financial literacy for all Americans, especially our country’s youth.

Over the years, Jump$tart has done an enormous amount of work to increase financial knowledge and education across the US The group started Project Groundswell, an initiative to get more financial education into schools, as well as creating the JumpStart Clearinghouse, an online library of financial education resources.

Jump$tart’s work to increase awareness about the importance of financial literacy has helped make it so that 17 states now guarantee a personal finance course for all public high school students. But there is clearly more work to be done. This Financial Literacy Month you can act by checking to see if your child’s school offers financial education by going to CheckYourSchool.org. If it doesn’t, you can send an email to the principal asking for financial education to be implemented. You can also start the conversation about money at home. Raising your child’s awareness about money opens the door to more ongoing conversations and teaching opportunities.

Of course, increasing financial education is just one piece of the puzzle when it comes to solving our nation’s financial literacy problem. There are plenty of free resources that can help you take control of your finances by setting a budget, tracking your credit score, and starting an emergency fund. The State of Iowa Save4Later program provides a free online financial planning course and retirement savings planning guides that you can explore at your convenience. By taking these small steps and seeking out financial education, we can all get a little closer to financial freedom.

Rayna Stoycheva is the director of Retirement Security Policy at The Harkin Institute and is an experienced policy and faculty in public administration and policy researcher. She joined The Harkin Institute in 2021, motivated by the opportunity to contribute to public policy-making through high-quality policy analysis and citizen engagement in the policy process.