Financial literacy education could help many Americans

EEven as our country continues to weather the worst effects of the COVID-19 pandemic, supply chain issues persist, inflation, pressure on labor and wages are rising, and interest rates increase. As Americans struggle to make sense of it all — and plan accordingly — a lack of financial literacy makes it difficult for many. In the long term, this lack of knowledge puts the American dream in jeopardy for millions of people. We believe the private sector has an opportunity and a responsibility to help solve this problem by providing employees, families, customers and communities with increased access to financial education.

There is a great need for this kind of effort. Today, only about a third of Americans have a working understanding of interest rates, mortgage rates and financial risks, according to the Financial Industry Regulatory Authority. And this measure of financial literacy has dropped 19% over the past decade. This gap is estimated to have cost Americans more than $415 billion in 2020 alone.

Lack of financial capability is impacting Americans both at home and in the workplace. Money-related stress has been linked to significant health issues, including heart disease, diabetes, sleep problems and depression. These life-threatening conditions can lead to expensive medical treatment, which in turn creates more financial stress and worry. Financial difficulties are now the second leading cause of divorce. In the workplace, 97% of employees admit that they spent time working or worrying about finances during the workday. Stress-related illnesses cost employers nearly $300 billion a year in lost productivity, and 4 in 5 workers admit to being financially stressed.

Black America continues to be particularly impacted by these challenges. More than half (54%) of black Americans have credit scores below 640, essentially unable to fully participate in American free enterprise. Half (54%) of Black Americans also report living paycheck to paycheck, compared to 44% of Americans overall. Only 43% of blacks own their home compared to 72% of whites. Blacks make up 14% of the population, but own only 3.5% of small businesses.

These are more than just statistics. Behind the numbers are real people: tens of millions of parents, seniors and young people who experience financial hardship, personal struggles and strained relationships as they struggle to save, borrow and invest in ways that provide greater financial stability, flexibility and security.

To help address these issues, we’re coming together to co-chair Financial Literacy for All, an inclusive, business-led movement to help more Americans reap the benefits that come from making more informed financial decisions. We plan to empower low- and middle-income individuals and families from all walks of life, walks of life, and communities, from urban to rural and every point in between. We will use the creative genius of our partners to generate excitement and awareness around financial literacy; thanks to our partners, to increase the well-being at work of working adults; and support initiatives to bring basic financial education to every school district nationwide. And, given the wealth gap faced by Black and Hispanic households, we will ensure that our efforts are relevant and readily available in these communities.

Since its launch in May last year, the Financial Literacy for All movement has been joined by nearly thirty other CEOs and chairmen, including leaders from The Walt Disney Company, the National Football League, the National Basketball Association, Delta Air Lines and several other leading financial institutions.

We believe financial literacy can be inclusive, creative, flexible, and results-driven, and we believe the diversity of our coalition will help us make meaningful progress toward that goal. Disney, after all, specializes in engaging and entertaining people through the power of storytelling. The NFL and the NBA know how to attract and inspire enthusiastic audiences. Operation HOPE aims to equip people with the financial tools to build a more secure future. And Walmart is deeply connected to communities, with 1.6 million associates, more than 4,700 stores, serving more than 137 million customers per week across the United States. Each member organization will also do more for its employees and communities.

Our shared passion for improving financial education is rooted in our goals and values. Nearly 60 years ago, Walmart was founded on the idea of ​​helping people save money to live better. Since 1992, Operation HOPE has worked to expand economic opportunity and make free enterprise work for everyone. Each of us views this new venture as a natural extension of what our organizations have been doing for decades.

We know that efforts like these can make a difference. To cite just one example, Operation HOPE provided free, personalized financial coaching and education, helping some to raise their credit scores by 54 points in six months and over 100 points over 24 months, reduce levels debt and help clients create and increase their savings for emergencies and the future. And, in some cases, helping workers transition from tenants to owners, or from small-business dreamers to small-business owners.

We understand that the financial challenges faced by millions of American households cannot be overcome through financial education alone. Other factors are also holding people back, including barriers to education, job training, financial services and job opportunities, as well as discrimination of all kinds. These obstacles also need to be overcome, and many private sector actors are making significant progress.

Even so, we believe that better, more accessible financial education and higher levels of financial literacy could help millions of families. This type of work and other similar types of work lift “all the boats” in communities and in our country. Increasing GDP through improved financial intelligence benefits society as a whole and creates more sustainable opportunities for the nation. And the added benefit – less stressed citizens and workers – translates into better societal health, for everyone. These are big goals, but we believe they can be achieved, and that is the challenge we have set ourselves. We urge other business leaders to join this movement.

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