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Wednesday, February 4, 2015

Why financial literacy matters

Money is what people depend upon for physical survival, so it makes sense that financial literacy is important. However, the reality is financial literacy is not necessarily a predominant part of secondary education. Why is this? Is it because knowing too much about money would make people too smart early on? or is it because knowing too much about money would produce wealth within the labor force at a rate too fast for sustainable GDP growth? Many high-level decisions are left to organizations other than households to make, but is this really a better alternative to homeschooling or an upbringing rich in financial education?

The economic reality is that many Americans are heavily in debt and do not have enough savings to last without a paycheck for very long. This is good for the economy because it keeps people working hard to produce. However, it is not necessarily beneficial for a host of other reasons including financial stability,  household solvency and steady progress toward retirement goals among other things.. The H&R Block infographic below illustrates the importance and impact of financial literacy in addition to what many students actually know about finance, which is likely to be very important in their future.