Financial Literacy is Knowledge and Knowledge is Good.....
This is what I believe.
Raise the financial IQ of buying public and we all can make better buying decisions and hopefully avoid our own personally financial meltdown. Here are my thoughts:
A while back, I had the opportunity to volunteer for a Financial Literacy Fair held at a local college for the benefit of local high schools that wanted to participate. It is a new program fund entirely by local business and volunteers. The goal is to raise the financial IQ by simulating real life.
Here was the process to enlighten the students:
1. Select profession.
a. Based on GPA
b. More education the higher paying the profession
2. Receive a credit score.
a. Everyone receives a low score (opportunity to
improve credit score comes later)
3. Buy a car and insurance.
a. Up selling is the goal for volunteers.
4. Purchase a home and homeowners insurance.
a. Up selling is the goal for volunteers
5. Receive an unexpected expense.
a. For example an unexpected car repair
6. Saving and Investments station
a. This is the most time consuming step and the
student finds out if they are saving or going into debt.
7. Final step is to repair their credit
a. After credit repair, the student revisits the home and
car buying stations.
The goal is to teach the following:
• Save now for A LOT MORE later
• The huge saving in credit cost with a good credit score versus a poor credit score.
• Savings account is where unexpected expenses get taken care of and not on a credit card
• Help them realize the reality they will face in wanting the nicer home, especially if they can not afford it.
• Up selling them is part of life and they need to learn to buy what they can afford, not always what you want
•· Plan for unexpected expenses
I do believe that financial literacy taught and implemented is a positive step and the early in life the better. I personally was never taught anything like this when I was in High School. Some people are naturally very conservative; some are the opposite and other fall somewhere in-between. Why can't we have transparence and full access to resources to make an informed decision (not sure we always have reliable sources)? What is the harm in taking responsibility for our education and actions?
BTW, I really enjoyed the time I spend working with the students and plan on doing it again.