How Financial Illiteracy Deeply Threatens US Stability


It might seem like they are on two different tracks, but personal financial soundness and American national stability are closely related. Obviously, when the United States’ economy is turbulent, this has an immediate and lasting effect on individuals’ money. But this cuts the other way too-when large groups of American citizens do not manage their money well, this impacts the United States on the global stage.

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This happens in many ways. America has many programs which help to take care of its citizens. These programs are funded by American tax dollars, a constant complaint among a certain political set. And while it may certainly be virtuous for America to provide a social floor beneath which no one can fall (at least the beginning of such a floor), no one can say it’s not expensive.

When large groups of people go deeply into debt, stop paying their mortgage, or don’t pay their taxes for one reason or other, this creates a scenario where the American government (funded by the American people) must help to fix the problem. There are many good reasons why a person might need a helping hand, and it’s a good thing for American government to make provisions for these individuals. On the other hand, for people who are able to manage their finances properly, this outcome is certainly not desired or beneficial.

Not everyone with messy finances is this way out of laziness. Frequently, the situation arises from ignorance about how money works. Personal finance isn’t taught in schools. Most people learn from their parents, who may not be very knowledgeable themselves. Fortunately, today you can learn about personal finance on the Internet’s top finance blogs, each devoted to a different set of issues that individuals struggling with money face.

If you are among the 50%+ of Americans with no retirement savings, even with the ease of investing with Betterment or other automated services, it’s time to learn about the best techniques there are to change your trajectory. When you really understand how concepts like budgeting, compounding interest, emergency funds, etc., work, you’ll find it’s much easier to change your habits. People who don’t really understand the way forward find it almost impossible to find the motivation. To change, tell yourself “why” through research.

The alternative is ongoing difficulties for the American economy. As national health programs seek to bring efficiency to the health care economy, for example, there are still many financial problems that happen every day. Take, for example, an individual who can’t pay for a large medical bill. This situation happens all the time, forcing hospitals to take a loss, pursue expensive legal action against the patient, or try to recoup their money through bailouts, donations, or insurance. As you can see, these money traps contribute to hospitals being less effective for all other patients.

Problems like these are fixed through making financial systems more efficient, and through the individual action of citizens to take better responsibility over their money. As the latter changes for the better, American health, happiness, and stability are bound to improve. Learn about money; do it for yourself and for others.