The Huffington Post – Terri Friedline, PhD
“The Great Recession has served as a flash point for public discussion about Americans’ finances, exposing their poor financial health and limited financial knowledge. In addition to systematic failures in financial regulation and misconceptions of risk, blame has sometimes been levied against individuals with limited financial knowledge for contributing to the recession. This latter explanation implies that the recession’s effects would not have been as wide or as deep if individuals had had the right financial knowledge. In any case, it’s a complex financial world in which responsibility is increasingly shifting to individuals to make the financial decisions today that are critical to their financial health in the future. Financial education is proposed as a solution to Americans’ limited financial knowledge and, subsequently, a way to improve their financial health. Financial education(1) refers to the passing on of financial knowledge that takes place either individually or in groups through workshops, seminars, trainings, and planning sessions in school or employment settings. The Great Recession aside, there is good reason to be concerned about the level of Americans’ financial knowledge. For instance, only 9% of 15-year-olds in the United States demonstrate the type of competency on advanced financial knowledge questions that would be necessary for making informed decisions for taking out student loans, interpreting mortgage agreements, or comparing investment portfolios.(2) In other words, individuals may make healthier financial decisions and behave in more financially optimal ways when they are better educated.”(more)