According to Adrienne Penta, co-founder and executive director of the Center for Women & Wealth at Brown Brothers Harriman, the secret to success comes down to imparting two life lessons: delayed gratification and autonomy.
What is financial literacy?
It is the knowledge of financial concepts, the ability to communicate about financial concepts, the aptitude in managing personal finances, the skill in financial decision-making, and it is the confidence to plan for a financial future. Financial education is needed for all ages.
Financial literacy is most commonly viewed as a specialized kind of consumer expertise pertaining to how one manages one’s financial affairs successfully
Financial literacy is a measure of the degree to which one understands key financial concepts and possesses the ability and confidence to manage personal finances through appropriate short-term decision-making and sound, long-range financial planning, while mindful of life events and changing economic conditions
Every single person in this world is interested in money, but 70% of parents say they’re reluctant to talk about money with their children (parents are finding it harder to have conversations about money because they don’t have cash around).*
*T. Rowe Price 2017 Parents, Kids & Money Survey
We want to spread and increase financial literacy because:
What do improved personal finance and economic education result in?
What is financial literacy?
It is the knowledge of financial concepts, the ability to communicate about financial concepts, the aptitude in managing personal finances, the skill in financial decision-making, and it is the confidence to plan for a financial future. Financial education is needed for all ages.
Financial literacy is most commonly viewed as a specialized kind of consumer expertise pertaining to how one manages one’s financial affairs successfully
Financial literacy is a measure of the degree to which one understands key financial concepts and possesses the ability and confidence to manage personal finances through appropriate short-term decision-making and sound, long-range financial planning, while mindful of life events and changing economic conditions
- Financial literacy:
- Confidence in financial information search
- Planning for money long-term
- Willingness to take investment risk
- Numeracy
- Generalized self-efficacy
- Delayed gratification
- Restraint
- Self-control
Every single person in this world is interested in money, but 70% of parents say they’re reluctant to talk about money with their children (parents are finding it harder to have conversations about money because they don’t have cash around).*
*T. Rowe Price 2017 Parents, Kids & Money Survey
We want to spread and increase financial literacy because:
- More than half of states don’t require high school students to take an economics course.
- There are currently no national standards for K-12 financial education.
- Lower levels of measured financial literacy are associated with lower rates of planning for retirement, lower rates of asset accumulation, lower participation in the stock market, higher rates of using alternative financial services and higher levels of debt.
- Only 80% of people have a household budget.
- 53% of respondents have credit card debt, and of those, 48% have a balance of $5,000 or more.
- 27% of people have student loans more than $40,000 and 77% of people have student loans more than $10,000.
- Financial mistakes and poor financial habits that are developed at a young age could have lasting consequences.
- Students who are required to take personal finance courses have better average credit scores and lower debt delinquency rates as young adults.
- People exposed to state-mandated financial education had higher reported rates of savings and higher net worth.
- 77% of people agree following a budget has helped their financial situation
- Young people who are in school after the implementation of a financial education requirement have higher relative credit scores and lower relative delinquency rates than those in control states
- Lower levels of measured financial literacy are associated with lower rates of planning for retirement, lower rates of asset accumulation, lower participation in the stock market, higher rates of using alternative financial services and higher levels of debt
- Young adults have particularly low levels of financial literacy
What do improved personal finance and economic education result in?
- A better understanding of the US and World Economy
- Greater propensity to save for retirement
- Reduced amount of personal debt
- Increased likelihood of having emergency savings