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BEACON Senior News - Western Colorado

Folks of all ages need financial literacy

Aug 01, 2022 02:39PM ● By Arthur Vidro

Why do we require applicants to take a test to obtain a driver’s license before they hit the road? To show that they have mastered basic knowledge and skills. 

Sometimes I wish we did the same with financial matters. The unskilled wielding their financial power can lead to ugly financial messes.

Schools try their best to make sure graduates meet a certain standard of literacy. However, financial literacy, or the ability to understand financial processes, is one of many topics—along with poetry, music and art—that gets placed on the back burner. 

I don’t care how well computer literacy is taught, but I do care that financial literacy isn’t taught enough.

As of 2020, just 21 states required high schools to teach financial literacy. Of course, schools that aren’t required to teach it may still elect to do so, but that data isn’t readily available.

The result of this non-requirement? Graduates who don’t know how to budget, are untrained at spotting scams and far too quick to part with what should be private financial information, such as bank account or Social Security numbers.

A school with a financial literacy course could combat the current state of ignorance when it comes to basic skills such as budgeting, filing tax returns, opening and maintaining a bank account, balancing a checkbook and saving for retirement.

“But my computer keeps track of everything,” some might say.

But that’s not the same as your possessing the skill.

I’m also surprised by the number of family members and acquaintances that don’t know how to address an envelope.

Take my distant nephew, Van. 

One summer, Van bought a used car. Having never dealt with car insurance before, he came to me and my wife, asking for help with a statement he received.

“How much do you owe?” I asked.

He told me a two-digit number. I looked at the statement. The “total due” box contained a rather large three-digit number. I asked where he had gotten the two-digit number. Van pointed to where it said the minimum payment due.

Companies prefer you make only the minimum payment so that they can charge you interest for the amount remaining. But Van didn’t seem to know that.

When Van finished college, he went on a long road trip to visit friends. Before leaving, he went to an ATM to confirm his account balance. But the ATM didn’t know that Van had written two checks that had not yet been processed. Van mistakenly believed the account balance reported by the ATM was money he could spend. 

Meanwhile, back at home, Van’s parents started receiving bank notices that his checking account was overdrawn and was incurring a $30 fee each time he withdrew $20.

Van lacked (and probably still lacks) financial literacy. It doesn’t make him a bad guy, but it does make him susceptible to foolish financial decisions. If only he could have learned financial literacy in high school.

Can you pass this financial literacy quiz?

This knowledge could make you less susceptible to scammers. Read More » 


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