Financial literacy means having the knowledge and skills to make informed decisions about financial matters like budgeting, investing, borrowing money, and managing debt. Important to achieving small goals and major milestones, financial literacy can make a big difference in everything from paying for emergencies and college tuition to saving for retirement and buying your first car or home.
Those who lack financial literacy may find themselves with debts they can’t pay, lower credit scores (with higher interest rates on loans), and difficulties building wealth over their lifetimes. That’s why financial education is so important, particularly to Southerners in the economically distressed communities of Alabama, Arkansas, Louisiana, Mississippi, and Tennessee, which rank among the least financially literate states in the nation.
Why is Financial Education Important?
Empowers Individuals
By increasing your financial literacy through education, you’ll empower your ability to make informed, responsible financial decisions. When you understand concepts like budgeting, saving, investing, and managing debt, you gain control over your financial situation. Rather than feeling overwhelmed or uncertain, you can be confident you’re making the right decisions through problem-solving, critical thinking, and your own knowledge of basic personal finance.
Promotes Financial Stability and Independence
Building your financial literacy helps you create a secure future, avoid financial pitfalls, and achieve your financial aspirations. You’ll know how to define your goals, create a plan for achieving them, and how to hold yourself accountable to build the life you want. In fact, studies show that individuals with access to high-quality financial education have better financial outcomes, less debt, and a higher quality of life.
Reduces Financial Fraud and Exploitation
Because it may lead to poor choices, financial illiteracy can make you more vulnerable to fraud and exploitation. You may not pay attention to your bank account, which can result in avoidable fees or missed opportunities to earn more on your money. Or you may not fully understand your credit cards, which can lead to higher interest rates, unfair terms, and greater debt. These decisions can cost you—literally: one survey found that lacking financial knowledge costs a person about $1,819 a year (that adds up to $436 billion for all Americans).
Improves Economic Well-Being
Financial education not only makes people more independent and improves their well-being, it can positively impact their community and its economy, too. Those who are financially literate are less likely to take on too much debt, reducing unpaid bills and late payments that can negatively impact a local economy. They’re also more likely to save and invest, which can contribute to economic growth. Local entrepreneurs who are financially literate are more likely to succeed, increasing job creation and economic development.
Financial Literacy Programs and Resources
Tennessee Financial Literacy Commission
Filling the critical need for financial education in Tennessee, the Commission offers a free online educational platform with self-paced, interactive courses covering topics including planning for retirement, repaying student loans, understanding credit reports and scores, saving for a child’s education—and more.
Mississippi Council on Economic Education (MCEE)
Because financial literacy impacts life-long wealth-building opportunities, education should start at a young age. MCEE provides free resources and training to K-12 educators, empowering students to create a more prosperous future for themselves and Mississippi. The goal: Train educators to provide students with grade-appropriate skills in financial literacy, economics, and entrepreneurship.
GreenPath Financial Wellness
Available through Hope Credit Union, the GreenPath Financial Wellness program offers members free individualized counseling, guidance, and educational resources to increase their financial literacy and achieve specific financial goals, whether they want to manage debt better, buy a new home, or save for retirement.
Ready to increase your financial literacy? HOPE can make it happen. Since 1994, we’ve empowered more than 3 million people across Deep South communities to strengthen their financial health. Contact us to see how we can do the same for you.