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Personal Finance Friday: Financial Literacy in America


The following articles are personal finance articles written in recent years to provide additional insight into alternative insight into the importance of financial literacy in America.

The personal finance race begins day one of a consumer’s life. The race is a cradle to grave marathon, and the ability to successfully complete the race is because of the knowledge and experience given to an individual at the onset of learning. This race is so important to an individual to navigate the events of life, and the quality of life is a direct result of the ability to successfully manage the personal finance race. Because of the importance of personal finance to one’s life, the prevailing thought is personal; finance would be a cornerstone of the education system, financial system, and regulatory system. As However, the literacy of personal finance is not a focal point of any portion of the American education, financial, or regulatory system.

As a review of recent history, the bright, intelligent high school studentwould graduate with honors and a diverse background of knowledge including subjects such as Calculus, Physics, Chemistry, Algebra, and Sex Education (Public Schools). This bright student has been accepted into a respectable university of higher learning to experience the best days of a young person’s life. However, the first few weeks of college are filled with many different organizations in the courtyards or lunch area that advertise all the activities and benefits of being a student including the ability to obtain a credit card. This interaction is the first educational exposure for many students in the realm of personal finance, and the otherwise benign credit limit of $500 becomes a menace for many otherwise bright, intellectual students. This student is very capable of handling the college course load to successfully graduate and obtain initial employment. The personal finance race is not as certain as a first mistake on a small credit card could lead into a life of personal finance disasters that will eventually crippled the quality and existence in life. What a difference could be made in the educational programs of personal finance in elementary school to having a positive impact on the individual, community, and real economy in a financially healthy and educated community.

However, the first college credit card is the introduction to personal finance for many. The tardy start in personal finance is creating a financially weak society even among college graduates. Many individuals do not pursuehigher education after high school, and the impact of bad financial choices is even higher.

As a result, the personal finance race is lost at a very young age that leaves a consumer unable to manage the laws, reality, or the structure to master personal finance to become savers and innovators in society. The race is lost and the negative impact is on the quality of the individual’s life, community, and real economy.Image

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Smithsonian in Washington, DC courtesy of donny-wise.com

In a consumption society, the 2008 credit failure has altered the spending habits of all Americans including the death of mega consumption economy, which accounts for 70% of Gross Domestic Product (GDP). The collapse in property prices, job market collapse, and the collapse in the stock market were catastrophic to the finances of the consumer. The banks are being an advocate of immediate profits in lieu of the moral responsibility to the economic literacy and health of the community. Banks provided easy money, no win loan products, and services to rake in fee income. Banks are regrouping from credit losses and the tightening of existing credit in closing or reduction on credit cards, equity lines, and business credit lines and issuance of new credit to all borrowers including creditworthy business and consumers. The tide of easy money is not available in the post crisis world. The consequence of a post debt gorge is consumer whose are debt rich and savings poor. The attitude on finance is a contributing factor to the current economic mess in America.

Since the onset of 1980, American high school students were graduating to attend college with classes in Calculus, Physics, Chemistry, and Foreign Languages. The exclusion of personal finance and relationship management classes as is a cataclysm in the current failure to teach the two most fundamental skills to be successful in an American economy. The current education system believes sex education is paramount to teach children about the impact of sex in life, but personal finance has a higher impact in consequence. Education leadership has strong passions about allowingsexual education in the classroom. Where is the passion over financial literacy in the school system? The cost of forgoing the education process in personal finance and relationship management is a consequence of creating a financial destitute and servitude society where poverty, starvation, and economic collapse are inevitable. What benefit are condoms when financial ruin is across the land?

As a result, the missing financial curriculum in education is not penalizing one segment or portion of the middle class demographic. The consumer is unaware of the legal rights and protection available under the federal and state regulatory structure of the financial system. The result is the consumer who has been the dutiful steward of account management, savings, and borrowing to provide a balance to be financially secure in everyday life, but this consumer is human with life events beyond control including identity theft, divorce, and bank errors. What is a consumer to do without any advocate in a partner to inform and assist in this matter? The advocate and partner being the banking industry, and the current relationship vacuum are producing dire consequences for all consumers, communities, and the real economy.

In conclusion, this article is the first in a series of articles about the loss of freedom from the unethical practices of banks, fragmented regulatory structure, and the lack of financial literacy in the public American society. The current system does span social classes to negatively impact even individuals of high net worth and prime-credit scores.

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  • America’s crisis point in financial literacy

    Donny Wise: Opinion/Analysis: Reading Literacy in America is essential to survive in society and the consequence of illiteracy to individuals and society is grave in relation to the potential of being trapped in poverty among other possibilities including worse outcomes including criminal behavior and homelessness. The impact on society is compounded when illiteracy influences a significant segment of the population, and the result is the probability the system will be responsible via many avenue of government services to support and maintain the individual because of being illiterate. Reading Literacy is essential to be functional in American society, but our modern society requires more than Reading Literacy, Writing, or Arithmetic to be functional in the mainstream of American society. The additional requirement is Financial Literacy, and the reality is that America is facing a Financial Ignorance crisis on an issue with the impact on an individual spans from the cradle to the grave.

    In America, 73 Million Americans live without access to MainstreamFinancial Services, and the adult population is around 280 Million as of the 2010 Census. One in four Americans do not have access to Financial Services in America, and this figure does not provide the same shock value if the statement was one in four Americans are reading illiterate. The financial literacy crisis point is now as the credit crisis brought this issue to service in American society. The danger in financial ignorance is grave to the quality of life in society, personal freedoms, and future economic growth. The consumer is end user of the financial world, but the financial world does not provide a business, regulatory, or education environment that is consumer centric. The reality is that personal finance impacts human existence from the date of birth until the end of life, and the attitude in society is that personal finance is taught as tribal knowledge from family, friends, or significant other.

    As a result, the financial literacy is non-existent in American society, the negative implications are affecting all income and education levels as the current recession, job market, housing crisis, and foreclosure fiasco has brought crisis to many American households. Financial Literacy is a starting point to make our consumers into captains of personal financial destiny, but Financial Literacy must begin as part of the elementary education experience. The American education system does not provide a widespread curriculum on Financial Literacy. The American education system is falling behind other industrialized nations, and this failure of the education system ponders many in America. How can the American education system be an excellent system of learning when the system is unable to recognize Financial Literacy as a pinnacle part of learning in America?

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