Top ten list on financial literacy
Financial literacy matters more than before. Yet it’s a safe bet that most young people don’t learn much about personal finance at school–elementary, high school and college. A leading advocate for teaching young people the basics of managing money is Annamaria Lusardi.
She’s professor of economics at Dartmouth, Director, Financial Literacy Center, and blogger
Annamaria Lusardi: There are a lot of top-ten lists that have been compiled for a variety of topics. I like these lists and I thought I would do one for financial literacy. Here is my list of top ten things everyone should know about financial literacy:
1) What is financial literacy? Financial literacy is like print literacy, or knowing how to read and write. It is the knowledge of basic but essential concepts that enable people to navigate today’s economy.
2) How do I know whether I am financially literate? You can take a test here:
3) How does my financial literacy compare to others? The above test will tell you how the average American responded to each of the five financial literacy questions. If you want to know how financially literate people in your state are, check here:
4) How does financial literacy in the United States compare with financial literacy in other countries? I have performed a comparison of financial literacy across eight countries (the U.S., Italy, Germany, the Netherlands, Sweden, Russia, Japan, and New Zealand). In a nutshell, the world is flat in terms of financial literacy: most people in these countries do not have thorough knowledge of basic concepts of economics and finance. You can read about this work here.
5) Why should I become financially literate? Can’t I be happily ignorant? There are costs of being financially illiterate. Studies show that those who have low financial literacy are less likely to take advantage of the opportunities offered by financial markets (for example, refinancing mortgages when interest rates go down or getting higher returns on investments), are less likely to invest in mutual funds with low fees, and are more likely to have problems with debt and to pay higher borrowing costs. When it comes to financial issues, ignorance is not bliss.
6) Where do I go for information if I want to improve my financial literacy? For readers in the United States, a reliable and independent source of information is Mymoney.gov. One of the best web sites for financial literacy is New Zealand’s national site. Here is the link (after all, we are going global!):
7) What if I want to have fun while I’m learning? Excellent idea! Doorways to Dreams has designed several financial literacy video games, so you can become financially literate while having fun. Here is their financial entertainment website.
8) What do I do to promote financial literacy and to become financially literate? Ask for financial literacy programs in your school, your workplace, and your local library. Become an ambassador for financial literacy.
9) Who is promoting financial literacy? Here is a list of people (and one puppet) who are promoting financial literacy.
Elmo, puppet and TV celebrity (for you younger readers)
Ben Bernanke, Chairman of the Federal Reserve. You can read one of his recent speeches here:
Ray Lewis, football star. You can read about one of his talks here:
Both President Bush and President Obama have been supporters of financial literacy, via, for example, the President’s Advisory Council on Financial Capability10)
10) Are there any big initiatives happening on financial literacy?Yes, there are many. One important initiative is that of the OECD (Organization for Economic Cooperation and Development). Starting in 2012, the OECD’s Programme for International Student Assessment (PISA) will measure financial literacy among 15-year-olds in 19 countries. You can read more about this important initiative here:
If you want to read more or learn about new programs, here is our web site:
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