What Is Financial Literacy?

What is financial literacy? There are many definitions floating about, and most are based upon a knowledge and understanding of personal finance and financial institutions.

Beyond Personal Finance

The public is faced with nearly two decades of struggling global economies, unemployment, and the collapse of numerous financial institutions. Very few families have not experienced the fear of uncertain personal finances and felt concern about being financially stable and secure in their future. Yet, within the same time frame, changes in legislation for investment, saving, retirement, and capital lending have provided the opportunity for individuals to acquire wealth through entrepreneurship and investing.

Therefore, our definition of financial literacy encompasses more than just personal finance. To be financially literate, an individual does need to be fluent in personal finance, but also in global economics, entrepreneurship, and investing -- all on a platform of real-time technology.

Personal finance has moved beyond merely balancing your checkbook and saving for a rainy day. Most banking and financial transactions happen online and in real time, and they can involve and intersect with several institutions and individuals in a matter of seconds. The need to access and utilize money can be immediate. It also requires an understanding of how to navigate personal finance technologically at an early age, which is a necessity today.

Global economics impact everyone. Long before the era of industrialization, trade and commerce between countries and continents were interconnected and interdependent. Currently, struggling economies have brought more individuals who seek entrepreneurial endeavors. Entrepreneurship is more than having an idea for a product to manufacture. Ideas, services, and even commentary and critique now have a market -- and a market value. Entrepreneurship is about seizing an opportunity to advance ourselves and our ideas, and to benefit financially from the interests and needs of others.

Investing is the jewel in the crown. It is simply not enough for an individual to work hard and earn money. You need to make the money that you earn work hard for you! Investing is the greatest source of accumulating and maintaining wealth. There are a myriad of ways to invest, allowing even the hard-working individual to grow his or her finances and secure a comfortable future.

Teaching Financial Literacy: An Open Invitation

In terms of public education, financial literacy is unexplored territory. School districts acknowledge that it is necessary for students to be financially literate in order to be college and career ready. However, it is difficult for schools and districts to consider how they will achieve that goal. What content should be included? What specific skills should students be equipped with? How can the curriculum and instruction engage students in real and meaningful ways? How can students understand the ways in which financial literacy applies to their immediate worlds? The stakeholders in this conversation are public partners, financial institutions, and government entities. Missing from the conversation are teachers.

Every school administrator knows that teacher buy-in is critical. Even the best data-driven, research-based curricula, without teacher ownership, becomes just a set of expensive worksheets. Teachers need to know and understand what it takes to become financially literate and why it is so necessary. They must be at the forefront of defining what financial literacy is and what it is not.

I am inviting teachers of economics, business, social sciences, math -- and in fact, all subjects at all levels -- to join in this conversation. In the comments section below, share your ideas on this unexplained territory. Share your experiences, and please provide the defining components to a new body of knowledge that will lead our students into the next millennium.