Tuesday, October 7, 2008

Financial Crisis and Financial Literacy... (1)

This one, can be a "financial irony"... two entirely opposite yet sensitive issues in an apparent "contradiction". How come we can talk about nations trying to avoid a global financial meltdown where countries are trying to avoid having financial industries worldwide facing possible bankruptcies and , in the meantime, talk also about "convincing" people to acquire a basic financial literacy?

Would it be useful to convince people to become financially aware that credit card debt (among other things) is almost... "public enemy # 1° for a financial peace of mind particularly in tough economic times? How about if we could convince people that financial literacy is in fact a key issue to not only to "read" but to consider seriously at all times because there are concrete things to do as Mr. G.E. Miller proposes on his blog post "10 basics for financial peace of mind in tough times" (fortunately, in these financially tough times, there are many very interesting, informative and valuable informational source to read and understand what financial literacy implies and I found Mr. Miller's post as a compelling approach towards financial literacy).

Thinking about an increasingly easier way to think about financial literacy as a key element to keep in mind, being myself a financial professional, I'm absolutely convinced that we need to talk on a regular basis about the urgency to create awareness to manage on a more careful basis our investments, savings and particularly the way we consume products and services and avoid financial risks not only on a local but a global basis

While the same public has become increasingly angry especially about the utmost "greed" that bankers on Wall Street have had -and its unfortunate results- and the bailout the US Government approved some days ago in order to save the financial industry from a major collapse, in this regard, academics and authors (among them Annamaria Lusardi and Mike Summey respectively) have expressed coincidental views as to the lack of financial literacy the public has shown while investing, saving and spending money mostly without taking some basic considerations to avoid risky scenarios

As an initial frame of reference about Ms. Lusardi's work, she argues that the public is already financially illiterate and Mr. Summey, on the other hand, argues that the educational system -as a whole- has failed to teach the concept to students.

Food for thought?
We'll continue talking about this issue...

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