Financial illiteracy is symptomatic of larger problems in America

Linda McMahon, the new secretary of Education, has her hands full. Her game plan is to dissolve the Department of Education, given its unproductive state, should immediately work at the state of financial literacy in the population as the “canary in the mine shaft” for not shuttering the department, but remaking it.

- Sheldon H. Jacobson, Tribune News Service

The Education is viewed as one of the wealthiest countries in the world, if you pay cash at a store that requires change, and the cash register is not functioning, how likely is it that the cashier will figure out your correct change?

Such an insignificant but so very common phenomenon perfectly illustrates our nation. How financial literacy plagues our nation. The areas where financial literacy make a difference are numerous. When purchasing a home, markdown payments, automobile, the interest rate on Jane and the points you buy all total a lower rate all impact the total cost of the home purchase. Deciding between fixed rate versus variable rate mortgages is an exercise in risk assessment and forecasting. Most institutions have computer software that gives you the numbers. Yet understanding what these numbers mean demands a level of financial literacy that few possess.

The same can be said with using credit for purchases. Around one-half of all credit cards users pay interest on a balance, which means that they are carrying a balance at such interest. Given that interest rates on now minimized Roth IRAs, credit cards are viewed as unsecured debt, a $1,000 purchase today can easily double in cost if paid for over several years.