Financial literacy is defined by Wikipedia as “the ability to understand finance. More specifically, it refers to the set of skills and knowledge that allows an individual to make informed and effective decisions through their understanding of finances” (Wikipedia, 2012). In the United States has taken several steps over the past decade or so to increase education and understanding of finance. The U.S. Treasury established the Office of Financial Education in 2002, which is responsible for expertise and education of persons within the Department of the Treasury. In 2003 the U.S. Congress also established the Financial Literacy and Education Commission. This department was charged with improving financial literacy of all people in the United States. We can see good and bad financial decisions being made every day just by looking around us. Even though the government has established several different consumer protection agencies some people still do not use them or don’t know how to use them. In turn this leads to bad financial decisions. Looking at the way the government and employers were running things several years ago by making financial decisions for us, “for example by providing health insurance, defined benefit retirement plans and social security” (Cooley, 2010). Now people have to make their own financial decisions for everything. Health insurance within the next few years will be decided by the family as some companies will opt out of their own coverage. For several years now individuals have been deciding their own retirement by using 401k’s and alike. Also, from the look of things as they are right now our social security benefits will not exist for use in supplementing our retirement programs. In the article by Cooley, he points out just how out of touch the general public is by citing the results from a survey taken of adults over age fifty. The results were dramatic and surprising that these people are getting closer and closer to retirement age and have no knowledge of how to save for it. Or what they need to put away for future use. The possible options are too dumb down the product, or educate the consumer better so they can make the proper decisions for their future. There are ways to better educate the public on financial literacy. The belief is that just because someone has a mortgage or a bank account that they are financially literate is wrong. The federal government published a report titled “Promoting Financial Success in the United States.” Financial literacy needs to be not only the responsibility of the government but also the companies involved in the purchases and the individuals learning these fundamentals.
This starts with the companies responsibilities. First they need to make finance understandable I learned this going from a career Marine to a civilian again. After twenty years of using military jargon and acronyms that mean generally nothing to anyone but the military you have to ensure everyone around you can understand what you are talking about as well. In finance this would be using terms like dollar cost averaging which in layman’s terms means automatic investing. Then to make education in finance more available to everyone so that when the financial systems increase in complexity so do people’s education on the subject.
With three sons I have a good knowledge of what is really being taught in schools here in Ohio. I have a son in college, one in high school and one in middle school. None of them have received any formal education about finance, just the general subject matter like history, math, science, etc. My belief is that we should train them early or we are lessening our chances of teaching them later in life. Unfortunately most children receive their financial education from their parents, which means that if the parents are financially illiterate it will be even more distorted by the children later in life. Thanks to the education I am currently getting I can teach my children a little better and hopefully set them on the path to future success.
The OECD or Organization for Economic Co-operation and Development was established to “promote policies that will improve economic and social well-being of people around the world” (OECD, n.d.). The OECD has a membership of thirty-four countries and the group is determined to give the world a better life through education. This group has a solid plan in place from the determination of the amount of financial literacy by conducting a survey and how they will compile the information to get a clear understanding of the deficiencies that are out there. In this survey many things were covered from personal financial issues, to where people receive their financial advice and what their feelings and general attitude are about their financial situation. Per Messy in the global sense financial literacy is “a combination of awareness, knowledge, skills, attitudes and behaviors allowing individuals to make sound financial decisions to improve their financial wellbeing”.
HSBC (a British multinational bank) and a group called SIFE (Students In Free Enterprise) are very big proponents of Financial education throughout the world. SIFE works under and reports to HSBC in the area of several areas of financial knowledge. The goal of HSBC is to better educate people on finance so that they can better function in modern society. HSBC considered this a “holistic financial literacy project and would have individuals assessing their status and defining their needs, setting goals, creating a plan for achieving goals, executing the plan and monitoring and reassessing periodically” (HSBC, 2008). These groups teach economic responsibility by getting checking and savings accounts, teaching them innovation such as getting their own businesses started, and allowed people to gain financial independence. SIFE also teaches children from pre-school age by teaching what is money and financial responsibility. In middle school they are taught budgeting, saving and compound interest. Finally, in high school they teach how to establish good credit, earnings, employment and short and long term financial planning. They also work with adults after school age to give more understanding to those already in today’s workforce so they can begin to prevent poverty throughout the world. In turn they are creating better savers and investors so that they can become better borrowers and better spenders. Seeing that several countries are taking a vast interest in the financial knowledge of people throughout the world, I believe that people will begin to learn so they can make their lives better and achieve happiness by planning their future finances. I think that too many people in the United States rely on entitlement programs and believe that those of us that work have a responsibility to support them by paying for their welfare, food stamps, section eight housing, etc. By this I mean that there are always going to be people that no matter how much they are educated they are always going to be under the assumption that it is someone else’s job to support them. Not to say that some people don’t need the assistance, however in most large urban areas it has become a way of life. As far as the rest of the world there is a definite disconnect between the classes and from seeing several of these countries myself there are drastic class differences and it will take a lot more than just education to change their way of living. In most third world countries the people have been downtrodden for so long that some of them have lost hope in believing that anything could get better. By seeing that people are learning financial independence and creating a better life for themselves they will try to achieve the same end result and seek education so they can get there. In closing, I believe that these countries are on the right track by providing better education to their people and providing hope for their future. By educating these people and teaching them to be more independent they are getting something our generation never did in school and that is a good understanding of financial literacy.

Works Cited
Wikipedia. (April 17, 2012). Financial Literacy. In Financial Literacy. Retrieved April 23, 2012, from http://en.wikipedia.org/wiki/Financial_literacy.
Thomas F. Cooley. (January 13, 2010). Forbes.com. In America's Financial Illiteracy. Retrieved April 23, 2012, from http://www.forbes.com/2010/01/12/cfpa-financial-illiteracy-credit-cards-opinions-columnists-thomas-f-cooley.html.
OECD. (n.d.). OECD about page. In About the Organisation for Economic Co-operation and Development (OECD). Retrieved April 23, 2012, from http://www.oecd.org/pages/0,3417,en_36734052_36734103_1_1_1_1_1,00.html.
Flore-Anne Messy. (n.d.). Citing Websites. In OECD International Financial Literacy Measurement. Retrieved April 23, 2012, from http://cerp.unito.it/images/stories/appuntamenti/messy_updated_measurement_oecd-infe.pdf.
HSBC. (2008). Citing Websites. Ln Global Impact Report 2005, 2006 and 2007. Retrieved April 23, 2012, from http://www.sife.org/aboutsife/News/Documents/FINALGlobalImpactReport.pdf