My passion for financial literacy began over dinner when my father started teaching me about money when I was thirteen years old. As I observed those around me, I became fascinated by the relationship people had with money. It became apparent very quickly that my father was right when he told me money was emotional.
But it wasn’t until I became a financial advisor in the early 90’s that I realized how deeply rooted our emotions around money were and the hold they had on us. In my client meetings I discovered money caused so much anger, fear and resentment that it led to shouting matches between couples, sometimes right in my office.
Money could shatter marriages, paralyze intelligent individuals and cause us to lose hope.
But it didn’t have to be this way. I could help people think differently about their money. So many were enslaved to their debt, stuck in a spending cycle where they bought item after item for a moment of bliss. But it’s incredibly hard to stay happy when debt has a stranglehold on your life and finances.
People allowed money to control their lives for far too long. It was time for them to take back control, and I could help them do this. It became my passion to help people find the joy of living within their means and this is why financial literacy matters to me.
Unfortunately, we do not live in a financially literate world.
- In a 2010 Northwestern Mutual Life Insurance study to determine general financial knowledge of Americans, 69% of the 1,664 participants received a failing grade.
- 75% of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. (NY Times, Teresa Ghilarducci)
- In 1980, the ratio of Canadian household debt to personal disposable income was 66%; that ratio recently passed the 150% figure (Statistics Canada 2011)
- Private bankruptcies tripled in the past 10 years, both in Europe and the US (Three Coins)
Our Ever Shrinking Financial Knowledge
Even though we handle money every day and consume so much, our financial knowledge appears to be shrinking. I find people fall into two camps:
Those in debt who view money through a lens of misery and guilt while still believing more stuff is what will bring them happiness. They keep buying things for that moment of bliss.
Those who have financial freedom and the choice to do what they want. They look at the options in their price range and choose which one makes them the happiest and aligns with their goals.
We all want to experience financial freedom, yet few of us do. Why? Because too many of us don’t know what we are saving our money for. One of the first things I taught my girls was money needed a purpose, which is why we set save, spend and share goals every year. Without purpose, it becomes very difficult to make smart choices with our money whether you are a child or an adult.
Make Your Money Work for You
The first question I ask people is what do you want your money to do for you? I get a lot of vague, generalized answers, which doesn’t work for me. And shouldn’t work for you either.
Be specific. Don’t just say retirement. What does retirement mean to you? What will you do? When do you want to do it? Slow down and figure this out for all your goals too – buying a home, college education for your kids, a new car, family vacations, etc.
When you take the time to figure out what you really want (and not what society thinks you need), good things start to happen. Your outlook changes and your spirits rise. You find the strength to say “no” when you are tempted to spend your money on things you don’t need and instead eliminate the debt that weighs you down. You recognize knowing what you want helps you make smart money choices that feel good.
You no longer ignore your finances but stay on top of them, fine-tuning goals as life happens and priorities shift. You use your money to create joy for yourself and others. You do it for yourself, for your kids and because financial literacy now matters to you too.
Financial Literacy Matters to Us
April is Financial Literacy Awareness Month. In celebration, I’ve invited some wonderful personal finance bloggers to join me today to celebrate such an important topic by sharing why financial literacy matters to them. They all have their own unique story and offer great tips, advice and community on their respective websites.
Please join us in supporting Financial Literacy by visiting the participating bloggers. Follow them on twitter, like them on Facebook and bookmark their blogs—you will be glad you did.
Financial Literacy Awareness Carnival Participants
Frugal Rules: Who Haven’t You Paid?
Reach Financial Independence: Why I Care about Financial Literacy and You Should Too
Tackling Our Debt: Teaching Financial Literacy in High School
Femme Frugality: Security throughout the Ages
Young Adult Money: Financial Literacy Definition Challenges and Good News
Debt Roundup: How Debt Started My Quest Toward Financial Literacy
Eyes on the Dollar: Why I Care About Financial Literacy
The Frugal Path: Teach Your Children with Actions
A Young Pro: The Key to Financial Freedom
The Random Path: Financially Under Construction
The Frugal Farmer: Our Story: In Honor of National Financial Literacy Awareness Month
Cash Cow Couple: 5 Warning Signs that You Might Be Financially Illiterate
Johnny Moneyseed: Financial Literacy Breeds Financial Idiocy
Plunged in Debt: If You Can’t Brush Your Teeth, You Likely Can’t Manage Money
One Smart Dollar: Why Financial Literacy Should Be Important to All of Us
Thrifty Dad: Financial Literacy Starts at Home
Broke Millennials: Candy Tax and Other Childhood Grudges
Canadian Budget Binder: Money and Finance: Why I Care about Financial Literacy
Debtblag: Why Financial Literacy Matters to Me
Thanks again for your participation! I look forward to reading your posts!
The Heavy Purse Store is now open! My new downloadable Money Club Workbooks are now on sale. Each workbook provides five targeted lessons to help you raise Financially Confident Kids. Please check them out in The Heavy Purse Store.
Photos courtesy of www.freedigitalphotos.net.