Saturday, October 31, 2009

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 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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