2020 began with some devastating financial blows, and many bank accounts have yet to recover. We wanted to take a moment to share some reasons why financial education is so important right now.
COVID and the Lack of Financial Literacy
The COVID-19 pandemic has affected more than just our physical health – it has impacted our financial health as well. And unfortunately, many people who were the most financially unstable also took the biggest hits when the shelter in place orders and other layoffs started.
89% of Americans believe that a lack of financial education “contributes to bigger social issues in America, including poverty, lack of job opportunities, and wealth inequality,” according to an article from Fortune.
Credit unions are some of the top institutions that provide low-cost or no-cost financial education to their members, and right now is a perfect time to expand those offerings.
Reasons Why Financial Education is Important, Especially Now
Financial education is not just for kids, though it is always a great idea to start educating young people about the importance of financial health and stability. Everyone, no matter your age, race, gender, or financial background, can benefit from this education.
Your Financial Needs Change as You Age
Financial literacy and education can be more than just learning how to balance a checkbook or create a household budget – it can help students become more aware of the benefits of the FAFSA and other grants and loans with low or zero percent interest rates.
It can teach young adults about the importance and impact of credit and debit card use, or help middle-aged citizens start planning for retirement.
Planning for Disaster is Better than Just Reacting to It
Credit union members, no matter how frugal, were likely not prepared for a majority of 2020 to be spent surviving and reacting to a pandemic, where job loss and economic downturn were rampant.
Financial education is like the Disaster Preparedness lesson you sat through as a kid when your instructor told you to go home and make a plan with your family for surviving common disasters like floods, thunderstorms, and power outages. No one wants to look for flashlights when the lights go out, you want to know where they are.
The same is true with finances: half of all Americans report they would “feel financial hardship if they had to cover an emergency expense of $1,000 or less in the next 30 days,” according to a Charles Schwab Financial Literacy Survey.
The $1,200 federal stimulus checks are long gone for the majority of Americans, and what we thought would be a blip in our year has now become months of unemployment and reduced work hours, and more and more families are facing tough financial decisions as the holidays approach.
Financial Education Helps Younger Generations Move Upward, Out of Poverty
Those who are born into financial stability or excess likely won’t see a drastic change in their investment income and stability by employing tactics learned through financial education courses, but those individuals who are raised in lower economic classes can.
This means those individuals and families who are struggling the most can benefit the most and improve their financial health the quickest when they have access to financial education at a younger age.