Financial Literacy, What Is It and Why Does It Matter?

     Financial literacy, we all need to know it. It’s the first base to cover as a rising investor.

Financial literacy is saving money intelligently. It’s understanding the value of money. It’s understanding financial terms, tools, and opportunities – and also the traps to avoid. At the highest level, it’s putting your money to work for you by smartly investing. On the flip side, not being financially literate can be costly. A person can dig a hole without even realizing it and get stuck. When this happens, it’s tough, financially and emotionally. So let’s avoid that.

     Sadly, many of us lack these necessary skills – and experience some negative consequences. Only about 50% of Americans consider themselves financially literate on a base level (, and four of five adults wish they were taught more ( Furthermore, about 50% of adults admit they’ve faced challenges when trying to purchase a home. Some, but not all barriers include 1) not having enough money saved for a down payment, 2) having too much existing debt, and 3) having a low credit score ( So the problem for a person in this situation is they can’t get approved to make the purchase they want, so they have to compromise or take a lesser deal.

     America, as great of a capitalistic powerhouse as it seems to be, has failed to convey its financial knowledge to all of its people. It ranks 14th overall in the world on basic financial skills, and in more detail, students perform average when tested on it. ( 

     As Carrie Schwab-Pomerantz states, president of the Charles Schwab Foundation, “As we know, so many Americans lack the basics of money management, and so, it’s difficult for adults to pass on that knowledge to their children when they don’t really have the knowledge themselves.” ( A huge problem that’s threatening my generation as well.

     The big question is, how can we fix this? Well, for starters, there are many online websites and courses that can be very helpful. Allowance is also great for kids. “Allowance can teach kids, little kids, the value of money,” says Carrie Schwab-Pomerantz. ( This is great. It helps children learn the value of money and allows for a conversation about it to begin at home. However, allowance isn’t something that everyone can afford, so it can’t be the only tool. 

     The good news is, that many Americans want Financial Literacy to be a required high school class. According to Forbes Magazine, more than 80% of Americans think high schoolers should take personal finance courses, per a survey published last month by the National Financial Educators Council. ( The American youth is our country’s future. So, we can’t focus solely on adults. 

     The solution should include everyone. Society can move forward positively if more and more people become financially educated. Without financial knowledge, many financial issues occur. Possibly leading to unemployment, poverty, debt, homelessness, and more. As Carrie Schwab-Pomerantz says, “I was really, I guess, pleasantly surprised that so many Americans—basically 90 percent of Americans—say that poor financial literacy contributes to many of America’s issues, such as poverty and lack of job opportunities and that they’re recognizing the power of financial literacy and how it can empower our society.” ( Financial literacy is critical, especially in a crisis. 

     That’s why I am so passionate about this project. So, here is one source that can teach anyone the basics: (