Living Paycheck to Paycheck: Why Financial Literacy Matters Now More than Ever

Financial Literacy is among the major complaints of this generation. You can’t go one day without seeing a budgeting meme, a broke meme, or the classic running away from bills meme. People are fleeing the country to avoid paying student loans, it’s getting pretty nuts out there. (Sallie Mae needs to invest in retrieval squads)

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Student Loan Default rates are heading toward 80% by 2024

On top of that, our social circle Twitter pundits are quick to mention that this wouldn’t have happened if they taught this in school.

On the flipside, I’m wondering if the teachers are complaining about not having enough money, budgeting issues, and not understanding the terms of the Public Service Loan Forgiveness program; are those the teachers that we think are qualified to instruct the next generation? Let me rephrase it, you want the teachers with money issues to teach your kids about Budgeting, Savings, and Investments?

Many students enter their college years without a strong, financial literacy background – in fact, college students are failing at financial literacy. Learning the importance of making wise financial decisions earlier, can help students avoid monetary blunders that can haunt them for years to come.

How Do The Teachers Feel?

PricewaterhouseCoopers (PwC) committed $190 million to increasing financial literacy. As such, a researcher paid a truckload of money. PwC later released the report, “Bridging the Financial Literacy Gap: Empowering teachers to support the next generation” which determined that there is a critical need to educate students at a young age, both at school and at home. Deep breath. We all knew that already but I guess we need data. The research also revealed what educators thought:

1. Teachers don’t feel comfortable teaching financial education

Few teachers are prepared to teach personal finance, and in most states you can teach a class despite not having to prove you are expert in the field, as educators must do in other subjects.

“In a national survey of adults by the FINRA Investor Education Foundation, only one in five reported having taken personal finance at school, college or the workplace. Public school teachers don’t emerge from college with such a specialty, so it’s no wonder they feel less than qualified to teach personal finance.” Not enough teachers know the basics of financial education, John Pelletier

2. Four primary barriers exist

Lack of appropriate curriculum, qualifications, take-home materials, isn’t viewed as a critical skill for college and career readiness.

3. Teachers want more support

They often have to seek resources on their own. Unfortunately, our society doesn’t provide them with the resource and the pay needed to do their jobs. 751 teachers left their jobs by the end of August 2020, according to the state’s School Personnel Administrators Association. That’s up 75 percent, from 427 in 2019.

4. Financial education should start earlier (at home)

Teachers worry parents/guardians aren’t doing their part (as always). We are technically treating them as a supe up free or reduced daycare.

5. Educators cite tremendous benefits in providing financial education to young people

I saw the same thing giving financial literacy speeches to middle schools, high schools, and college students. I made the Pythagorean theorem palatable, I guess.

It’s with a bit of reassurance that educators (who are critically underpaid) still want to help in the fight for financial education. Educators see the value of teaching students to budget, prepare for the future, and become better financial decision-makers.

In the end, these very educators need the same help themselves.

For teachers, check out Financial Planning for Teachers: 10 Tips I Wish I Knew.

Carrying a Balance of Consumer Debt is Fairly New

The other day, I got into a conversation about this issue. My colleague stated that “her parents didn’t know anything about credit cards… we should have been taught in school.” After a quick search on Google, it’s apparent that no one knew anything about credit cards. It’s a fairly new mainstream innovation.

Back in 1958, Bank of America launched the first consumer credit card program for middle-class consumers and small to medium-sized merchants in the US. It was known as the BankAmericard. This was highly regulated exchanges for small businesses, primarily regulated owners. The company introduced the debit card in 1975. In 1976, the BankAmericard became VISA (a name that supposedly sounds the same in all languages). In 1983, Visa launched an automated teller machine network, providing 24-hour access anything and anywhere around the world. Most people now couldn’t tell you what ATM means. In 1986, the ultimate credit card ad was created. Visa, Everywhere You Want to Be. This singlehandedly transformed our society, however, credit cards didn’t grab hold until around 1997.

Translation, our parents did not grow up on credit cards. It’s fairly new and when processes are new, it takes time to work out the kinks. Debts in America have escalated to meet consumer demand.

ValuePenguin reported that as of August 2019, these American Credit Card Debt Statistics & Key Findings:

Average American Household Debt: $5,700.
Average for balance-carrying households: $9,333
Total Outstanding U.S. Consumer Debt: $3.9 trillion. Total revolving debt:$1.03 trillion
41.2% of all households carry some sort of credit card debt.
Households with the lowest net worth (zero or negative) hold an average of $10,308 in credit card debt.
The Northeast and West Coast hold the highest average credit card debt – both averaging over $8,000.
Besides credit cards, debt includes mortgages, auto loans, and student loans. Total debt/liabilities add up to an average debt per household of $132,529. You can easily spend upward to $2,000 or more per month, just to stay afloat.

In fact, data from the Federal Reserve shows that 40% of American Households cannot withstand a financial emergency of $400 or more.

With micro debits from the Internet, cell phone bills, car loans, student loans, credit cards, subscriptions, it doesn’t matter if you are a teacher, an accountant, a doctor, a lawyer, a baker, etc.

We all need financial literacy.

Hitting Financial Peace and Sleeping At Night

I ran a survey and found that financial literacy is crucial and we all want the financial wellness that comes with it. This translates to day-to-day control over personal finances, sleeping peacefully, easing anxiety, taking preventative measures, being on track to meet financial goals, and the financial freedom to fully enjoy life. For example, people with higher financial literacy IQ/EQ:

Are more likely to save and plan for retirement.

Have a greater propensity to track their spending and prioritize values.

Are less likely to be “financially fragile,” meaning they could pull together $2,000 in cash within 30 days in an emergency.

What Can We Do?

Several states require financial literacy classes for high school students.

Other programs are popping up every day for low income and underserved communities.

To boil it down, think about it as a painless five-step process: 1. Developing the right attitude, 2. Growing your awareness, 3. Increasing your knowledge, 4. Turning that knowledge into behavior, and 5. Achieving financial success.

Push for financial education in local schools and in church. And if the schools aren’t offering the education needed, we need to take ownership of making sure that our children get the information they need.

Free resource: Money Management Estimator

As for ourselves, it wouldn’t kill us to skip a meal here and there. Eating out is leeching away funds. As an alternative, we can start a fad called cooking at home, and inviting people over. If you really want to step your game up, grow a small vegetable garden. I’m planning on planting a plantain and a grapefruit tree at some point myself.

It’s imperative to have a savings and spending plan.

Tell your hard-earned money where to go and keep track of it.

Grab the Net/Max Financial Plan. There is one for singles, for single parents, and finally for couples with/or without kids.

You can have a great life so don’t limit it with time at the club or the mall down the street. There is a world of opportunity waiting for you. And don’t hold back from kids. They are learning from you. Explaining your losses and your wins are equally important.

Furthermore, we have to start talking about money more. No more secret spending just to keep up. Tell your friends that you want to change and ask them if they want to change as well. Once you have your friends and family onboard, now it’s time to hit up the PTSA meetings. Focus on going from A to Z by going through every letter. If all else fails Google everything.

We can’t win by simply saying A and Z. Appreciate the Story in Between that’s where the Lesson is Learn, that’s How We Remember.

Recommendation Bonus:

Ran by the Founder LaShea Reaves, MHR, CFEI (Orlando Magazine, 2018 Women of the Year), 8 Cents in a Jar – a 501c3 organization in Florida – which provides engaging financial education courses to students yearning to improve their economic condition. They offer comprehensive services that begin in middle school and into their transition from high school to college. Through their efforts, students are able to avoid common pitfalls with money and take advantage of economic prosperity at an early age in life. The best part is that teachers also get to chance to learn.