When we graduate from college, we are thrown into the world with the hope of finding a career related to our majors and with a basic knowledge in a wide array of subjects.
But how many of us would be prepared to say we are financially literate and fully capable of making wise economic decisions?
On Tuesday Nov. 8, U.S. Education Secretary Arne Duncan spoke to the Treasury Department in regards to improving financial literacy amongst younger children, which would then transfer to financial literacy amongst adults.
A national financial capability study conducted by the Financial Industry Regulatory Authority in December 2009 shows that financial literacy is relatively low among Americans.
When asked questions about interest rates, inflation, bond prices, mortgages and risk, only 10 percent of the 1,488 adults who were surveyed were able to answer all of the questions correctly.
In fact, individuals between the ages of 18 and 29 demonstrated a lower financial literacy than those 30 and above.
So how can we improve financial literacy?
"As important as reading and math and social studies and science, I think today more than ever financial literacy has to be part of that," Duncan said in his speech, according to Financial Planning.
"To continue to have a population that is relatively illiterate in these matters, I think, has real negative consequences to our democracy."
According to the FINRA study, 12 percent of the population is “unbanked”, or does not have a bank account. This number is actually higher within different groups.
For example, 36 percent of non-high school graduates, 31 percent of lower income households, and 22 percent of young adults do not have a bank account.
This statistic was also very alarming to Duncan. How can a person know the first thing about finance or even manage their money properly if they do not even have a bank account?
Duncan believes that financial education must start at a young age, suggesting that the instruction should start as early as kindergarten.
However, the Department of Education does not have the authority to make such changes in the curriculum of schools across the U.S. It is up to individual schools to see the importance of financial literacy and implement various economic courses in their curriculum.
"I always think you have to start young. So if this is just one course, half a semester (or) a semester senior year, (it's) definitely late in the game," Duncan said.
It is definitely alarming to see that only a small percentage of our population can be deemed financially literate. Hopefully, Duncan’s appeal to increase financial literacy will encourages schools across the nation to begin implementing various financial courses into their curriculum.
While it may not be necessary to start instruction as early as kindergarten, it’s no doubt that the sooner children are educated about finance, the better educated our nation will be.
Adults should be able to answer questions about interest rates and other financial topics with ease, and even be able to instruct others.
Duncan’s call for reform is definitely a huge wake-up call for Americans. Are you going to answer the phone?
Reach the columnist at agales@asu.edu
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