Frequently asked questions
What is Financial Literacy?
Financial literacy involves a number of different areas of understanding. Learning about money and how it works is an important aspect, as is understanding products like credit, loans, and insurance. The ability to understand and work with interest and exchange rates is also important, with interest being of particular concern since many consumers take advantage of the credit market.
Other topics of interest include understanding risks, learning how to evaluate potential investments, and identifying scams or dubious financial practices. Balancing checkbooks and accounts and being able to read account statements is also an important skill. Financial planning is another key aspect of financial literacy, as it is important for people to recognize how financial planning can help them prepare for life events.
NFEC The Financial Literacy Definition – by the NFEC, Jump$tart and GAO
Why is Financial Literacy Important?
decreases the risk of being ripped off
increases awareness of the true costs (especially interest)
makes better citizens, more informed voters
helps differentiate between “good debt” and “bad debt”
helps avoid some of the common misconceptions in finance
helps young adults gain confidence about money matters
making their own money
managing their own money
Are Most Teachers Ready to Teach Financial Literacy?
A 2009 national study found that K-12 teachers are not confident in their ability to teach financial literacy (source: National Endowment for Financial Education)