Financial Education Key to Closing Gaps
[A version of this article appeared on LinkedIn]
As our nation continues to face economic and societal challenges, it’s important to discuss how financial education helps set you up for success later in life.
In honor of Financial Literacy Month, I am focused on the role financial education plays in expanding opportunities for all Americans. Studies show that education is key to closing the racial wealth gap.
Nearly 2/3 of Americans cannot pass a basic financial literacy test, and 1/3 of U.S. financial inequality could be accounted for by the differences in financial literacy.
For example, life insurance is an important protection tool for long-term financial security, but too many people are uninsured or underinsured.
According to LIMRA, only 31% of Americans say they are very or extremely knowledgeable about life insurance, and consumers with higher knowledge are 30% more likely to have adequate coverage. Yet 42% of Americans say their household would face financial hardship within six months should a wage earner die unexpectedly.
The Help Protect Our Families campaign is working to close the coverage gap that exists for 102 million Americans.
People without financial knowledge risk falling behind, particularly if they belong to racial or gender groups that are also fighting income disparities.
As part of ACLI’s Economic Empowerment & Racial Equity Initiative, our industry supports financial education initiatives that will make a vital impact for all Americans.
Along with intentional programs, parents can help their children navigate tough financial concepts at a young age and even well into adolescence. In fact, both of my children have recently entered adulthood, and I still prioritize these conversations to ensure that they have the tools to build a financially healthy future. I recently had a conversation with my daughter Eve on how early financial talks have made a difference in her life as a recent college graduate.
We all have a part to play in helping more people access information, tools and leadership opportunities.