By Congressman Matt Cartwright, Pennsylvania’s 17th Congressional District.
This month we celebrate Financial Literacy Month in an effort to bring attention to this important life skill and encourage all Americans to take charge of their financial health. We’re confronted with a variety of financial decisions throughout our lives. Whether saving for retirement, buying a home, financing an education or simply putting away money in an emergency fund, a solid financial education is vital to making smart and responsible decisions.
The importance of consumer sophistication on financial matters has never been more important than it is in today’s economy. Unfortunately, Americans receive a failing grade when it comes to the subject.
According to Harris Interactive’s 2013 Consumer Financial Literacy Survey only 40 percent of adults say they have a budget and keep close track of their spending. Approximately 60 percent of adults reported that they have not reviewed their credit score within the past year.
analyzed by economists Annamaria Lusardi of George Washington University and Olivia S. Mitchell of the Wharton School of the University of Pennsylvania found financial illiteracy most pronounced among the young, women, and the less-educated. Moreover, the 2013 Junior Achievement/Allstate Foundation “Teens and Personal Finance” Survey found that of the 33% of teens who say they do not use a budget, 42% are “not interested” and 26% think “budgets are for adults.”
Financial illiteracy comes with a price.
The inability to understand compounding interest rates, the importance of saving for retirement, or the cost of carrying credit card debt hampers all aspects of an individual’s life. Poor financial decisions may bar someone from one day owning a home or weathering a spate of unemployment. And we certainly can’t discount the external costs to society as a whole.
As we work to prepare our students for the 21st century workplace, a consistent approach to financial education in our schools will help our students entering not only college, but also the workforce, be well-prepared and ready to make sound financial decisions.
The key to improving the financial literacy of all Americans is ensuring that our students have access, at all appropriate stages of their education, to formal financial literacy education.
Under current law, individual states are left to create and implement financial literacy education curriculum and courses in their districts and schools.
As a result, only four states require a minimum of one semester of financial literacy education in primary and secondary school, and only 20 states require that the topic be taught within another subject area. This is why I introduced H.R. 2920 – the Financial Literacy for Students Act.
The Financial Literacy for Students Act will:
- Create incentive grants to states who agree to provide financial literacy education in Title I public elementary and secondary schools.
- Allow for significant flexibility, creativity and innovation in the integration of financial literacy and entrepreneurship education into existing curriculum.
- Encourage appropriate professional development for teachers for the teaching of financial literacy education.
- Encourage states to foster partnerships with community-based organizations, financial institutions and local businesses by securing a match to carry out the required activities.
Promoting a financial literacy curriculum in schools is an important piece of a larger strategy to ensure that all Americans are equipped with the tools to make sound financial decisions for themselves and their families.
A financially literate America is a strong and secure America, and to ignore the problem of financial illiteracy is to shortchange our children and ourselves. I urge everyone, of all ages, to take some time not just this month, but every month, to seek out financial education opportunities in their area and take control of their financial health.