Why financial literacy is not just a buzz term
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Why financial literacy is not just a buzz term

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Andrew Housser / Co-Founder & Co-CEO

April 18, 2019

Why financial literacy is not just a buzz term
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Not so long ago, cash was the preferred method of paymentfor daily purchases, but times have certainly changed. As consumer shoppingbehaviors have evolved (think Amazon and online shopping) so has our relationshipwith credit cards and debt. Credit can cloud our view of spending, making iteasy to forget how much we have spent on something and/or how we are trackingto our monthly budget. It can also lead to unintended debt that stays with uslong after the useful life of whatever we bought on credit. A researchstudy from M.I.T. showed that since the 1970’s there has been growingevidence supporting the theory that credit cards encourage spending. In addition, a DartmouthCollege study found that most Americans have very low debt literacy– with only one third of the population understanding the principal of compoundinterest or how credit cards work.

Unfortunately, this lack of understanding about the fundamentalsof how credit works has had a terrible impact on the financial situation of theaverage American. Today, the average American household carries an astounding $137,063 indebt, according to the Federal Reserve’s latest statistics. Yet the U.S. CensusBureau reports that the median household income was just $59,039 lastyear – it doesn’t seem sustainable.

This, as you may be aware, is a critical problem nationally. Having a basic understanding of how credit works is key to making sound financial decisions. This is why, as a large corporate citizen of Arizona (Freedom Financial Network employs approximately 2,200 in Tempe), we applaud the recent passage of SB 1184 in Arizona. This vital bill will require that high school students in the state receive education in personal financial management before graduating. This is a critical period for most Americans; SB 1184 will ensure that Arizona students receive an important financial foundation before they begin to make financial decisions that will impact them into adulthood. Governor Doug Ducey, Treasurer Kimberly Yee, Senator Sylvia Allen, and all the supporters of the bill should be applauded for backing such an important piece of legislation that will have an impact on so many Arizonans.

As the co-CEO of Freedom Financial Network I see consumersexperiencing financial hardships and who are in critical need of assistance tomanage their personal debts every day. Our family of companies’ collective goalis to help consumers overcome debt to achieve financial wellness. We believethat providing our children with personal financial management tools andeducation is imperative to putting them on the path to financial security. Thedevelopment of fundamental financial literacy skills is a lifelong process thatbegins with something as simple as putting a few coins in a piggy bank, and eventuallygrows into understanding complex ideas such as compound interest, revolvingdebt and creating a budget.

Although financial literacy on its own won’t solve the consumerdebt crisis, Freedom Financial Network is hopeful that the enactment of SB 1184will better prepare Arizona high school students to make sound financialdecisions as they set out and start their adult lives. Collectively, we hopethat with increased financial capability, these young men and women will beable to better manage their personal finances in a way that will enable them tominimize debt, build wealth, and achieve their own financial freedom.

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Andrew Housser / Co-Founder & Co-CEO
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Andrew Housser co-founded Freedom Financial Network in 2002 and Bills.com in 2005. Andrew sits on the board of directors of several startup companies as well as two independent school boards.