A growing need for financial literacy in the US

When you were a kid, did your parents ever tell you how much money was in their checking account? Did they ever tell you how much they put aside each month for retirement? 

If you've answered no to these questions, you're not alone. While many Americans can tell you who is in the current National Basketball Association championship or which celebrities were recently married, many lack adequate skills to manage their finances.

The age of technology has made it easier for consumers to forget the value of balancing a checkbook given that they can use Internet Banking to view their online checking account. Additionally, some individuals don't understand why it is safer and more effective to save through a bank rather than a mason jar on the dresser or a stash of cash under the mattress.

How bad is the problem?
The gaps in financial literacy in the U.S. are no minor problem. Various studies have shown that the issue affects many Americans, partially as a result of insufficient education systems that don't include lessons on writing checks, saving and paying bills. A recent report from Wallet Hub ranked the states with the best and worst financial literacy. The source noted that only 40 percent of adults have a budget, which is crucial for taking on larger debts such as auto and home loans.

To create the ranking, Wallet Hub analyzed consumer habits and financial education programs for all 50 states and the District of Columbia then ranked one to 51, with one being the best score and 51 being the worst. New Hampshire topped the list with a state education ranking of five and overall financial literacy ranking of one. Mississippi was at the bottom of the list. It had an overall financial literacy ranking of 42 and state education ranking of 28.

Other views of the data
In addition to providing an overall ranking of the states, Wallet Hub broke the data down by several categories. Arizona is the state where residents are most likely to open a savings account to protect against emergencies, as 53 percent have a rainy day fund. At the other end of the ranking, only 33 percent of Indiana residents have emergency savings.

Closing the financial literacy gap
Experts have varying opinions on what should be done to improve financial literacy in the U.S. Some individuals, including Henry Levin of the Teachers College at Columbia University and Russ Goeltenbodt of Financial Literacy Experts, believe the government should do more to have more financial education implemented into public school curriculums. Other experts told Wallet Hub that this is a goal to be met by multiple players.

"There should also be support to help universities/community colleges provide this kind of service to adults," Laura Gonzalez Alana of Fordham University said.

According to Minnesota Today, the University of Minnesota-Duluth Student Association, has been pushing for more financial literacy programs to help students gain wiser spending habits and better manage student loan debt. 

For more information about smart ways to manage your finances, contact Landmark Bank.

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