How financially literate are you?

Only about half of all Americans regularly review their credit reports. About one third do not use any type of budget to manage their family expenditures. Social Security benefits will account for only two-fifths of the projected income for baby boomers at age 67. When it comes to financial literacy, most Americans are flunking. No example of illiteracy is more glaring than the financial crisis in which many families have found themselves during this economic recession. Although easy credit standards contributed, borrowers were financially naïve about their loans.

April is National Financial Literacy month and a great time for individuals to avail themselves of resources by reading and researching online and taking courses to improve their financial knowledge. Financial literacy is the ability to make informed decisions about one’s financial future and stability.

Parents should teach their children about fiscal responsibility and elementary concepts such as budgeting, analyzing income and expenses, balancing a checkbook, understanding credit cards and interest rates, and saving money and compound interest. It’s incumbent on parents to help their children learn these financial lessons and not leave the teaching up to the schools.

Here is more bad news about our children’s financial literacy: Over 90 percent of students whose parents took them on back-to-school shopping trips said that their parents had not discussed back-to-school finances with them. Slightly more than half of parents with children ages 6 to 17 have ever discussed saving or investing with their kids. A recent study, examining the overall literacy of college students, found that 20 percent of students in four-year colleges and institutions have basic or below average quantitative literacy skills. Another study conducted among high school students revealed that only about half of respondents were able to answer financial literacy questions correctly.

In addition to teaching their children, parents can also work with their children’s teachers to ensure that the classrooms, from early grades, contain some type of financial literacy education. A number of organizations provide material to help students learn fundamental financial concepts to ensure their economic stability as adults.

West Virginia is leading the way with a law mandating financial education as a high school graduation requirement. The Financial Football video game from the NFL and Visa is a multi-week program to teach financial literacy. By 2070, all adults in West Virginia will have participated in the program.

At the college level, the Rural Financial Planning Project was founded several years ago with the mission of improving the lives of rural Americans through the promotion of financial literacy and the delivery of financial planning by well-trained and ethical financial planning professionals. Partnering with RFPP, Shepherd University has created a financial planning major, which has been approved by the Certified Financial Planner Board of Standards Inc. The Project provides financial aid and mentorship to students. By creating a degree program with a concentration in financial planning, Shepherd University will graduate students, who can return to their communities and help people become financially literate, as well as obtain a better life through comprehensive financial planning. Another college is about to join the Rural Financial Planning Project.

If you’re not as well educated financially as you should be or if your children are lacking in basic financial fundamentals, there is no time like Financial Literacy month in April for you to learn and for you to teach your children, so you start getting A’s in one the most important components of a happy life.

Rob Hoxton CFP®, AAMS®, AIF® is the President and CEO of Hoxton Financial, Inc., a leading fee-only investment advisory firm. He is the founder of the Rural Financial Planning Project and the developer of The Grow Greenr® Method and the author of Grow Greenr, 10 Steps to a Richer Life, which is available at and Investing in Uncertain Times, which can be downloaded as a PDF file from He can be reached at or at 304-876-2619.

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