Financial Education or Financial Literacy is the ability to understand what money/currency is and how to use it in a way that allows you to live the lifestyle that you dream with out getting taking advantage of. Most people, especially in the U.S. have very little financial Education due to its limits in our school systems. Below I’m going to give you a little of the history to catch you up to speed.
The Changes To Our Money
The old rules 1971 Richard Nixon took us off the gold standard, and made our money a currency. Which means that its not backed by Gold but my IOU’S that are created out of thin air, which turns into debt as soon as its printed and distributed.
ERISA Or as you may know it 401K
In the year 1974 ERISA was passed (Employee Retirement Income Security Act). ERISA is now evolved into what you know as a 401k. ERISA was originally created for high paid employees and CEOs to help assist with an additional revenue. In 1981, the IRS ruled that all workers could use the same means for revenue. But one of the big problems with the 401k is that its not a retirement plan, its a savings plan. What this means to all employees that you no longer had a paycheck for life and that the company was not going to take care of you for the rest of your life. So after these dates you would now have to save and invest enough money so that you can pay yourself a paycheck for the rest of your life.
Prior to 1971 the old rules were
- Go To School
- Get a Safe Secure Job
- Save Your Money
- Buy a House
- Get Out Of Debt
- Invest For The Long Term
A lot of people today still say the same things, I’m going to school to get a good paying job, make a lot of money, I’m going to buy house, invest and diversify. Those were the old rules, now I’m going to get into the new rules of money.
Lets take at look at this word: School
Before the year 1974, you could just go to school and get a job and be fine in society, but today in our society, people need to know that you need more education than the school systems provide. For example, one type of education that ours schools provide is Academic (which is reading writing and arithmetic and trust me those things are very important to survive.
The second is Professional, after you graduate from high school, do you go on to law school, become a doctor, Lawyer, etc. This is also very important and ours school do a good job of that.
Now the third is Financial Education. Financial education is why our people are in deep trouble today, our school systems have very little if any financial education. Also the only financial education our school teachers are teaching our kids is the knowledge that they know which is get a safe secure job, work hard get out of debt etc. That education is inadequate at this time.
Now with some of the old rules explained, moving forward we all need more financial education and need to invest in our greatest asset which is our minds and increasing our financial literacy. Its by combining all three of these that will give you the advantage you need to increase your lifestyle.