What is Financial Literacy?
The Importance of Teaching Financial Literacy
Did you know that more than 60% of Americans live paycheck to paycheck? Without financial literacy, individuals struggle to save for emergencies or achieve long-term financial security. This issue spans across income levels, with even high earners finding themselves financially vulnerable. Credit card and student loan debt are at historic highs, highlighting the urgent need for financial education.
What is Financial Literacy?
Financial literacy, as defined by Investopedia, is “the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing.” It provides the foundation for a relationship with money and is a lifelong journey of learning. Early education is critical for long-term financial success.
Why is Financial Literacy Important?
Money management is not an innate skill; it must be taught. Financial literacy equips individuals with the knowledge to save, budget, and invest wisely. Learning these skills early helps young adults develop good habits that last into adulthood, reducing stress and enabling better financial decisions. It also ensures financial preparedness for emergencies, major life events, and retirement.
How is Financial Literacy Taught?
As of August 2023, nearly half of U.S. states require students to take a financial literacy course before graduating high school. The National Council for Economic Education identifies six critical topic areas in financial literacy:
- Earning income: Understanding income, taxes, and career decisions.
- Spending: Learning budgeting, consumer decision-making, and trade-offs.
- Saving: Exploring savings accounts, interest, and inflation impacts.
- Investing: Covering compound interest, portfolio diversification, and financial markets.
- Managing credit: Teaching credit scores, debt management, and borrowing decisions.
- Managing risk: Understanding insurance, identity theft prevention, and wealth protection.
How Catapult Learning Can Help
Starting in the summer of 2023, Catapult Learning began offering Financial Literacy enrichment courses through its Summer Journey program. These courses provide hands-on experiences for students in grade 3 and up, teaching personal finance management, budgeting, and investing.
Additionally, Catapult Learning offers Financial Literacy Reading Bags for students of all ages. These curated collections help launch students toward financial success by teaching money management and practical financial skills.
Learn more about Catapult Learning’s financial literacy programs.
