Is this the BOTTOM LINE about Financial Literacy? (2)

After having recently a conversation with Manisha Thakor (a fellow Linkedin member who is a consummate financial advocate) about another underlying issue that arises from my last blog post regarding Mr. Chris Gardner's critic on the current status of financial literacy in America, I thought about the convenience of adding a personal perspective about what financial freedom should imply.

While Mr. Gardner mentioned the responsibility that people should accept once and for all after many things changed radically in America because of the global economic crisis, Ms. Thakor has outlined a coincidental perspective as to the increasing importance of encouraging them to become fully aware about a more complex labor and financial outlook where educating them (particularly young people) on how to manage money more efficiently has become a hot subject:

"Mario - You highlight a VERY important point.... 'Are parents in America emotionally prepared to teach their children about money?' In the vast majority of cases I'd argue the answer is no. Thirty years ago I would have said yes. The difference? The financial landscape today is geometrically more complex. There are so many options that unless you work in financial services as a living, it's hard to keep up with it all. Layer on to that societal pressures influencing spending today over saving for tomorrow and you have some serious headwinds. My personal feeling is that as a nation we are headed for a few years of serious soul searching when it comes to our relationship with money... and I think that will be a very good thing indeed".

As we’ve discussed before, the U.S. Government and other educational entities (among them http://www.practicalmoneyskills.com and its recent project “Financial Soccer”) have been doing an interesting job in providing people with basic practical tools to facilitate a process of financial education as much as possible and, on the other hand, as one of many interesting examples, Invesment News on its article “Young and Realistic” has also outlined the importance of helping young people are becoming particularly realistic about a long-term retirement planning.

Although “Young and Realistic” creates initial awareness, I would argue its focus because it doesn’t mention another key related subject: teaching early Financial Literacy lessons for young people in the form of Money Management lessons: How could a college student or even a teenager learn to become “rich” (assuming that anything wrong happens AGAIN) if he / she doesn’t know know how to manage money?

While agreeing with both Mr. Gardner's and Ms. Thakor's thoughts, I could conclude that the current labor and financial outlook we're dealing with (and it's here to stay) should also stress the key importance of having socially, emotionally and financially responsible parents: (1) able to not make financial mistakes, (2) able to solve their own financial problems, (3) able to teach their children clearly and decisively how to manage money.

My 2 cents...

Image: Flickr

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Is this the BOTTOM LINE about Financial Literacy? (1)

After an involuntary absence from this forum because of a brief yet important editorial project ( I was invited to offer my written opinion about a Finance book), this is a good time to share some recent discussions about what I've perceived as the bottom line about what Financial Literacy is and its current and critical role -despite what I found and looks like a piece of rant- in order to help people on "Main Street" become more educated about those basic yet crucial financial facts happening and influencing their daily lives.

The video accompanying these comments, presents Mr. Chris Gardner offering a magnificent perspective about the current financial outlook and personal responsibility that people in America should be even more aware of regarding the urgency to become more financially literate given the rude "wake up" call that many of them experienced while realizing that many things (Mr. Gardner even speaks about changes in the way of life that people got used to for many years) changed radically because of the current global crisis.

In my personal perspective, Mr. Gardner has made an equally magnificent critic about the level of Financial Literacy in America as a current hot topic: he mentions that it is "nonexistent" even though the US Government has been doing what I think is a serious effort in helping and educating people financially.

After listening what Mr. Gardner said, I'm also surprised about contradictions that still emerge: a couple of weeks ago, the puzzling blog post "Young adults need to seek Wealth Literacy, not Financial Literacy", in my opinion, looked like some of sort of invitation to consider focusing on learning the basics of Wealth Literacy rather than learning (as a first step) the basics of Money Management which is one of many key basic financial subjects people should learn first (College students are a prime example of ignorance as to how to manage money wisely).

I honestly wonder how we can learn the basics of Wealth Literacy if we don't know the basics of Financial Literacy; Is it possible to skip learning what Financial Literacy means and start learning how to manage "Wealth"? Is this possible?

Financial Literacy provides the basics that will help people make more educated financial decisions, which will ultimately lead to building wealth.

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