April 27, 2021

Financial Literacy: Why It's Important at Every Age

(*Content provided by Let's Make a Plan)

We start adulthood in a deep hole.

We think of adulthood as beginning with the conclusion of our formal education. Millions of people today are entering adulthood with impressive degrees but virtually no financial literacy. They enter the working world with massive student loan and credit card debt. Too many of them don’t even know how to create and manage a personal budget or balance a checking account.

A young person’s financial illiteracy isn’t their fault. There is virtually no serious financial education in schools and never has been. Most of the curriculum is there to enable students to get a decent job to make decent money. Schools understand why they exist. We learn to earn.

Money is a tool – the most important tool we have in building our future. We send our children to school for 12 or 16 or 20 years (at considerable expense) to teach them how to make this tool. Yet, we spend no time teaching them how to use this tool properly. Is it any wonder they enter adulthood with huge income potential and minuscule wealth potential?

The parents can’t help their kids much here. They were never taught basic financial literacy, either. They’re stumbling along in middle age, trying to learn things on the fly. They look at their own financial situation and know they could be managing it better. And no parent wants to reveal their own financial illiteracy to their children.

These middle-agers are being slammed from several sides. They have a household to manage. They have children’s higher education to pay for. They may have elderly parents in their care. And they have to fund their own retirement along the way. For many, it’s impossible to even prioritize all these competing financial needs, much less fund them.

Why financial literacy is essential

Even if prioritizing and funding aren’t issues, a ton of financial literacy is still needed. If you expect your child to attend college, you have to learn about 529 plans, Pell Grants and other educational, financial aid programs. You need to know how much life insurance you need. Should you get long-term care insurance and when to begin? If you’re caring for an elderly parent, you’ll need to know how to pay for their care. And while all this is going on, you’ll need to estimate how much income you’ll need in your first year of retirement and then figure out how you’ll accumulate about twenty times that amount before retirement day arrives.

Even in retirement, financial literacy is still essential. An investment portfolio must be maintained. Medicare and Medicare supplemental insurance options need to be reviewed annually. Deciding where to live and what kind of home to have are new items on the agenda. And estate planning now becomes a priority.

The need for money never changes in our lifetime. What we need money for does change. Those changes alone require us to keep adding to our financial literacy. Even within specific areas like investments, there are continuous changes that require continuous learning. When it comes to financial matters, ignorance isn’t bliss; it’s expensive — very, very expensive.

At, you can find a list of financial topics to improve your financial literacy.

More important, at that same website, you can also find qualified CERTIFIED FINANCIAL PLANNER™ professionals who have the financial literacy you seek and who can guide you through every phase of your financial life.

Learn More at Let's Make a Plan

© 2021 CFP Board. Used with Permission.
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