Financial Independence: A Realistic Goal

Last week, I identified the percentage of people who feel powerless when dealing with retirement savings and offered some solutions. I also stated that 30 years ago I was the poster child for financial illiteracy.

Because I am a solutions person and not a rock chucker (I leave this to Earnest T), I am going to take this to the next level and provide additional solutions for financial success.

So where do most Americans stand when it comes to financial literacy? While a few get it, the majority does not and the following passage puts it in a nutshell.

Per James Surowiecki’s article “Greater Fools” in the July 5 issue of The New Yorker:

“The depth of our financial ignorance is startling. In recent years, Annamaria Lusardi, an economist at Dartmouth and the head of the Financial Literacy Center, has conducted extensive studies of what Americans know about finance. It’s depressing work. Almost half of those surveyed couldn’t answer two questions about inflation and interest rates correctly, and slightly more sophisticated topics baffle a majority of people. Many people don’t know the terms of their mortgage or the interest rate they’re paying. And, at a time when we’re borrowing more than ever, most Americans can’t explain what compound interest is.

“Financial illiteracy isn’t new, but the consequences have become more severe, because people now have to take so much responsibility for their financial lives,” Surowiecki says.

I could not agree more.

My first question is, why do so many Americans have problems understanding the basics of finance? Second, why isn’t this taught in our school systems?

The last time I researched the latter, I was shocked to discover only 14 states in the U.S. make introduction to investing mandatory in our high schools. No wonder we have such disastrous results.

In full disclosure, we have excellent investment classes in some of our Southern Illinois schools. I have spent many, many hours of my time speaking to classes and teaching teachers the basics on investing, and have no plans on stopping.

So where do we go from here? Recently, the John A. Logan College Investment Club decided to invest in their fellow citizens of Southern Illinois and share the fruits of their harvest by buying and placing investing/trading books (from some of the best minds in their field), in our area libraries. As a result, more than $5,000 of books has been donated to nine local libraries; JALC, Marion, Johnston City, West Frankfort, Royalton, Herrin, Du Quoin, Murphysboro and Carbondale.

I must add, not one penny of state, college or taxpayer funds was used in this purchase. These funds were generated by several years of hard work by the club members and officers. In full disclosure, I was the college sponsor and founder of the club, something I am proud of.

Because Independence Day is this week, why not decide this summer as the time that you declare financial independence for you and your family. Remember, input equals output, so take advantage of this opportunity, roll up your sleeves and discover how finances really work. Feel free to stop by your area public library and check out the many donated books ranging from basic intro to investing/trading to advanced subjects like trading options and futures.

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