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What is financial literacy? Financial literacy is knowledge that allows someone to make informed decisions with their financial resources. Typically, the knowledge involves budgeting, investing, and personal financial management. What does that look like in practice? Practicing financial literacy could be anything from having a set amount to save per paycheck to having monthly investment goals based on your pay and comfort level with trading to having a sticking to a household budget.

To be considered financially literate, one must understand basic financial concepts to know how to navigate the financial system in their country. It has been proven that people with financial literacy training make better decisions with their money and manage their money better than those without. Why is financial literacy important? Well, it's more or less stated above - those with better financial literacy make better decisions with their money and manage their funds more efficiently. Per a study published by the Financial Industry Regulatory Authority (FINRA), only 34% of Americans have some level of financial literacy, which means that more than half of Americans (66%, to be precise) are financially illiterate. How was this measured? Per the summary of the study, participants were asked 5 questions about everyday finances such as compound interest, inflation, principles relating to risk and diversification, the relationship between bond prices and interest rates, and the impact that a shorter term can have on total interest payments over the life of a mortgage. In order to satisfy the financial literacy metric, the participant had to answer at least 4 of the 5 questions correctly. 

What makes Financial Literacy Month so special? Well, it grew from Youth Financial Literacy Day which was originally put in place but the National Endowment for Financial Education (NEFE) as an activity of its High School Financial Planning Program, which is exactly what it sounds like. Notably, in 2003, the US Congress showed its support for having a month dedicated to financial literacy and asked former president George W. Bush to declare April the Financial Literacy for Youth Month. Then, in April 2004, the name was changed to the National Financial Literacy Month by the Senate with unanimous consent. And then in April of 2005, the House of Representatives passed a bill that called on President Bush to issue a proclamation calling on the Federal Government, States, localities, schools, nonprofits, and the people of the United States to observe the month with programs and activities. While former President Bush did not issue the proclamation, former President Obama did proclaim April as National Financial Literacy Month in at least two years of his 8-year legacy.

What can you do to become more financially literate? Well, most banks offer free programs to the public. You can reach out to find more information concerning any topic you want to learn more about. If you didn't know, we do have some free courses centered around financial literacy centered around day trading, cryptocurrency, and foreign exchange. The courses are completely free and available in a video format to anyone interested in learning more. Check them out in our Guided Learning Center, Glossary, and One Point Lessons.