It can be hard for individuals to properly watch their spending. April is Financial Literacy Month, and research shows that financial literacy needs to be made a priority.
The Government Accountability Office (GAO) defines financial literacy as “the ability to make informed judgments and to take effective actions regarding the current and future use and management of money.
It includes the ability to understand financial choices, plan for the future, spend wisely, and manage the challenges associated with life events such as a job loss, saving for retirement, or paying for a child’s education.”
Unfortunately, many studies show that there are many Americans, especially college students, are becoming more financially illiterate.
The Financial Industry Regulatory Authority (FINRA), a national organization designed to study financial literacy and spending patterns, discovered some very upsetting numbers for Tennesseans on a state level as well as a comparative national level. FINRA studies show that only 38 percent of Tennesseans do not find it difficult to make ends meet each month, in comparison to 40 percent of all Americans. Other studies showed that in the past year, only 48 percent of Tennesseans and 49 percent of all Americans were capable of paying their credit cards in full.
These studies and several others on FINRA’s website at USFinancialCapability.org show that many people are not financially capable of taking on the majority of their debt.
“In the US, we make great efforts to teach children to read and write, but we don’t give their financial literacy the same attention,” said one PBS.org report. “As a result, few young people know how to to manage their personal financial lives.”
New graduates take on a long list of new financial responsibilities following college, including mortgage and rent, student loan payments, car payments, insurance, cell phone bills, utilities, groceries and many other necessities that had oreviously been paid for by their parents or guardians.
After college, young minds are starting their journey into a total new world. The thoughts of being fully independent and not living with their parents anymore is enough to make any fresh graduate ecstatic.
However, many young individuals, especially college students and new graduates, are not prepared for managing all of the financial responsibility that is about to be thrown upon them.
These studies and others are showing that the United States is becoming increasingly financially illiterate. It’s time to make a stronger effort to raise awareness on how to be financially sound before the deficit becomes even less manageable.
We at The Pacer encourage everyone to take part in Financial Literacy awareness. You can start by taking the National Capability Study on USFinancialCapability.org and see where you stand.