Financial Football is an online game that blends personal finance and the gridiron endorsed by Super Bowl MVP Drew Brees. Image: Ian Rainsley Design + Illustration/Flickr

Financial Football 2.0 is a video game developed by Visa Inc. and endorsed by New Orleans Saints quarterback Drew Brees. Financial Football is available online to play for free. Players control the action on offense and defense by answering multiple choice questions about personal finance. Brees said he learned about personal finance the hard way and wanted to help others avoid the same mistakes he made. Whether Financial Football 2.0 helps accomplish that is unknown, and people who have played the game were underwhelmed.

Drew Brees: personal finance the hard way

Financial Football, developed by Visa Inc. in cooperation with the NFL, uses Drew Brees’ name to promote financial education by teaching children and young adults how to manage their money through the context of the gridiron. The Washington Examiner reports that Brees, the reigning Super Bowl MVP, has been working with Visa to publicize the game for about five years. Brees told the Examiner about financial lessons he learned the hard way, including a delinquent cell phone bill that came back to bite him later. He went over his minutes, didn’t pay the bill and it was sent to collections. Even with NFL millions in his bank account, the blemish on his credit report boosted the interest rate he paid on his first mortgage.

How to play Financial Football

Financial Football can be played online for free at practicalmoneyskills.com. The game features three different levels: Rookies age 11-14, Pros age 14-18 and Hall of Famers age 18 and older. Players can match up against the computer or match up head-to-head. On offense, players move the football with correct answers to questions about personal finance, student loans, credit cards, credit scores, debt collection, economics, retirement and investments. On defense, correct answers generate tackles, quarterback sacks and negative yardage for the opposing team. Players choose real NFL teams, and Financial Football shows stats about wins and losses for each team.

Struggling offense all too realistic

Gamers used to the cutting edge graphics of Madden NFL 11 will be gravely disappointed in Financial Football. Connie Prater at creditcards.com said her biggest complaint was that the game doesn’t tell players why their answer is wrong or provide more details about the correct answer. The game clock is always on and players only have 40 seconds to call a play, read the question and pick from the selection of answers. Running out the play clock results in a five yard penalty for delay of game. Apparently some people play without moving the ball enough to score any points — a feature that may seem all too realistic for some current NFL teams.

The Treasury Department is seeking public comment about a proposed set of financial education guidelines that will help Americans avoid personal financial meltdowns. Thinkstock photo.

The Treasury Department wants to distill the basics of financial literacy into a “food pyramid” for personal finance that makes money management as easy to understand as eating right. Even though a little more than one-third of adult Americans are considered obese despite the food pyramid, the Treasury Department is forging ahead. Public comments are being requested on a set of “financial education core competencies” the Treasury Department is proposing for use in financial education programs across the country.

Personal finance meltdowns a national issue

If there’s a lesson to be learned from the Great Recession, it’s that when it comes to personal finance, too many Americans are financially illiterate. A fundamental lack of knowledge about budgeting, investing, credit, lending and saving was exposed by meltdowns in finance, housing and credit. Investment Advisor reports that the Treasury Department’s Financial Literacy and Education Commission is conducting an annual review of its national strategy to promote basic financial literacy and education as mandated by the Fair and Accurate Credit Transactions Act of 2003. Using the “food pyramid” as an example, the Commission is trying to define the basics of financial literacy education for the public in ways that can be readily understood.

Financial education basics

The Treasury Department is accepting comments on or before Sept. 12. According to a Federal Register notice released Aug. 26, the Commission has identified five proposed personal finance concepts – or “financial education core competencies” – that it says “every American should have command of.” They include:

Earning:  Understanding the difference between gross pay and net pay, employee benefits and taxes and the importance of education.

Spending: The difference between needs and wants, learning how to create a budget, tracking spending and living within one’s means.

Saving: Understanding how saved money grows, how to meet long-term goals and wealth building, learning about bank accounts, understanding financial assets, such as savings accounts and investments.

Borrowing: Understanding the cost of borrowing and the role of credit scores.

Protecting: Learning how to protect assets, choosing the right insurance coverage and knowing how to guard against identity theft.

Seeking consensus on financial education

The financial education field lacks common ground on what it aims to achieve, the Treasury Department said in the Federal Register. It wants to facilitate agreement on appropriate basic content for financial literacy and education. Ted Beck of the National Endowment for Financial Education, who helped develop the core competencies, told the Dallas Morning News that in schools “there’s a wide variance in different kinds of programs, the quality of programs,” he said. “The idea of having a very straightforward checklist about the basics is something we think is very important.” A Texas education official told the newspaper that the core competencies listed by Treasury are a “good start” but the list is incomplete. For example, students should be taught the pros and cons of credit cards, mortgages, payday loans and other forms of borrowing.

Employee financial education increases productivity, reduces turnover and generates a substantial return on the investment required. ltdan/Flickr photo.

Employees with poor personal finance habits can affect a company’s profitability. Money problems at home can lead to lower productivity at work, health problems and excessive turnover. A company that promotes financial literacy among its employees can add hundreds of thousands of dollars a year to its bottom line. The weak U.S. economy has taken a toll on employee benefits like health insurance and matching retirement plans. But a company can still provide a safety net for its employees with education in personal finance.

Financial security through employee education

To help its workers achieve financial security, as well as its bottom line, a company can do more than provide a paycheck. The Durango Herald reports that Employees with serious financial problems can waste as many as 20 work hours a month worrying about their finances. The newspaper cites a survey of American workers by creditcards.com that found 57 percent don’t budget and 40 percent spend 110 percent of their household income. The survey also found a correlation between consumer debt and relationship problems. Fighting about financial security was a major reason 50 percent of the workers in the survey were divorced.

Financial literacy and the bottom line

Promoting employee financial education is the mission of the Personal Finance Employee Education Foundation. The PFEEF claims that financial literacy programs contribute hundreds of thousands of dollars each year to a company’s bottom line. Results of employee financial education include improvement in productivity, morale and company loyalty. Higher financial literacy can also reduce absenteeism, turnover and workplace distractions as well as operational risk across a company. The PFEEF provides a return on investment model and an ROI calculator online that a company can use to estimate the benefits of employee financial education. It said employee financial literacy generally has a return ratio of three to one.

Employee financial education in action

Financial literacy is part of the corporate culture at Weyerhaeuser, a Washington state timber company. Business Week reports that Weyerhaeuser is recognized as one of America’s leaders in providing financial education to nearly 14,000 employees. The company has an established a benefits education department that offered more than 40 retirement, benefits and wellness programs to its workers last year. Employees who attended Weyerhaeuser’s financial literacy seminars said that they were better informed about their retirement programs, 99 percent thought that they could now make better retirement choices, and 88 percent said they would change some of their retirement choices. Participants in the program thought the seminars were a valuable employee benefit that enhanced their positive feelings about Weyerhaeuser

Personal financial literacy begins in the home, but a survey shows that most parents give their own financial skills failing grades. Flickr photo.

Who else do kids have but their parents for getting a personal financial education? And what are they learning? A recent survey showed that most people learned their personal finance skills at home, from their parents. But the same survey showed that a great portion of those people gave themselves failing financial grades. Some people say that personal financial literacy needs to be taught in school. Others say that it’s not hard for parents to get up to speed on personal financial literacy so they can pass the knowledge along.

Parents in dire need of financial education

In its 2010 Financial Literacy Survey, the National Foundation for Credit Counseling asked people where they learned the most about personal finance. Most said they learned their personal finance skills from their parents at home. But when people were asked to grade themselves for financial literacy, nearly 25 percent gave themselves a C, D or F. The NFCC concluded that those in charge of the financial education at home are in dire need of financial education themselves.

Reading, writing and personal finance?

In this tough U.S. economy, many parents are drowning in debt, not planning for retirement or saving for college or able to purchase a house. NJ.com reports that these people may have been able to avoid these troubles if they took basic financial literacy courses in school. The NJ article said only 14 percent of teens nationwide take personal finance classes in school. NJ proposed that if the rate of teens taking personal finance classes in school nationwide had been higher in the past, perhaps the U.S. economy would be stronger today.

Kids set up for financial failure?

Last year, Wells Fargo conducted a survey and found out that only 5 percent of people ages 18-21 are confident they will achieve their financial goals. The survey discovered that only 41 percent know what a credit score is; only 28 percent understand annual percentage rates; only 41 percent understand the concept of the 401(K); and only 31 percent understand compound interest.

A financial tune-up for parents

It may be awhile before your school district decides to follow the lead of New Jersey, which is running a pilot project requiring financial literacy classes for high school students. But until then you can set a good example for the kids by getting your financial house in order with a mid-year financial tune-up. Boston.com offers five good places to start:

1. Budget and Spending — Take a look at your spending plan from the beginning of the year and compare your cash flow for the first six months. Did you allocate enough to cover expenses, or are you falling behind in certain areas? Start tracking every penny you spend, put a plan in place and stick to it.

2. Savings — Set aside cash for emergencies and short-term goals. Even a small amount can play an important role. The Consumer Federation of America found that with just $500 in the bank, you’ll sleep better and will be more likely to avoid high-cost borrowing and nasty fees for overdrafts.

3. Debt — Carrying high debt loads can have a big effect on your credit score, make monthly budgeting more difficult and leave you more vulnerable in emergencies. The first step toward solving these problems is to stop using plastic and chart a plan for paying off your cards.

4. Taxes —There’s a lot of uncertainty for people who try to plan for taxes this year, because Congress has not yet addressed a number of expired tax laws. But tax rates are expected to go up for all but the lowest income brackets in 2011,so be prepared.

5. Retirement — A retirement plan review starts with your 401(k), but it doesn’t end there. It includes Social Security and company pensions, as well. Figure out how much money you need to provide for yourself, and then to put a plan together.

Not Creating a Budget

Besides planning to pay a few basic bills, a lot of people who struggle with debt do so because they don’t carefully plan their spending. Instead of creating a written itemization of how every dime of their income will be spent or saved, some people simply wing it. While a cash advance can help people out in a bind, everyone should create a personal budget in order to avoid creating debt.

Failing to Pay Yourself First

In crafting a personal budget, a person must remember to pay herself a predetermined amount of money out of each paycheck. To not do so creates a level of frustration of working without reward. It is not surprising that people who neglect paying themselves a percentage of their income end up ditching a personal budget not long after its creation due to a lack of personal satisfaction.

Not Having a Rainy Day Savings

Similar to paying one’s self is having a rainy day savings set aside. People who neglect to designate a percentage of their earnings to a savings account find themselves in a bind when an unforeseen expense or emergency arises. Although a loan till payday is available for these times of need, a rainy day savings account specifically designated for unexpected circumstances adds to a person’s feelings of comfort and security, not to mention such a savings protects people from falling too far into debt when these circumstances occur.

Not Recording Purchases

Most people carry a debit card. For some, this convenience has almost completely replaced the practice of carrying cash. Unfortunately, however, some people end up making major financial mistakes while using debit cards simply because they forget to record small purchases like a cup of coffee or a small item purchased on any given day.

It is not unusual for such purchases to cause a person’s account to be overdrawn and result in costly bank fees. To avoid this, a person can create room for these incidental purchases in a personal budget and either plan to carry cash to pay for them, purchase a gift card that will cover these purchases or just remember to write each one down and carefully balance one’s checkbook accordingly.

Plastic People

Perhaps the largest and the most frequent of all financial mistakes that people make is when individuals rely on credit cards to pay for daily needs. Even worse are individuals who use plastic to pay for items that they don’t need, but that they want anyway. This is also the fastest and easiest way to fall into serious debt, particularly if only the minimum balance is paid on credit card bills each month as interest payments and other fees continue to accrue. Experts agree that credit should only be used when absolutely necessary, as the cost of using plastic is simply too high to use on a daily basis.

While most people make costly financial mistakes once in a while, everyone can avoid making them with careful planning, budgeting, record keeping, and self-discipline. If a mistake is learned from and adds to a person’s financial education, it has value. If it is ignored and repeated, it is a complete loss for the one making the mistake and can seriously compromise one’s financial future.

Surviving the loss of a spouse is never easy. Besides the obvious pain and loss felt, there is often an overwhelming amount of financial business to tend to. Unfortunately, credit card bills still needs to be paid, banking matters need to be appropriately handled, as do insurance matters. For those in an immediate cash crunch, a loan till payday or a cash advance may be arranged in order to gain a little breathing room. However, even with a short-term personal loan, it is very likely that other pressing financial matters will need attention, too.

Financial preparedness is empowering

While no one likes to think about being a surviving spouse, the sad reality is that people are placed in these situations every day. Knowing what to do ahead of time, however, can make a world of difference and can actually help ease some of the stress at that time. Therefore, everyone married or in a committed relationship owes it to themselves to know a few basic financial steps to recovery after the loss of a spouse or partner.

Here are a few financial tips that will help upon losing a spouse:

A New Banking Account

Open a bank account as a single person. Most people already have one, but if not, this is the time to open an individual checking and savings account for all future transactions.

Death Certificates

Request approximately fifteen certified copies of the departed person’s death certificate. The funeral home can help with this request or they can be obtained through the county office, which keeps a filing of marriage, birth and death certificates. These will be necessary in order to change deeds, names on bank accounts and other investments, and to collect any insurance monies.

Look for additional insurance policies

Call all of the credit card companies and banks that the departed held accounts with and inquire as to whether or not the person had any insurance policies with them. Often, companies offer insurance at a minimal cost and it is not uncommon for people to sign up for these on a whim. Loved ones are sometimes surprised to find out that their spouse had additional coverage through one of these means.

Contact credit card companies

If credit cards were held jointly, it is important to notify each credit card company of the spouse’s recent death. Be prepared that some companies will lower the credit limit on the card they offer, particularly in cases where the limit was based on the income of the deceased spouse.

Before paying credit card debt

If there is a balance remaining on credit cards that was created by the deceased spouse, it is best to speak to an executor or an attorney before paying these cards off. Often, debt matters are handled through what is called a probate court, which creates a schedule for paying remaining debts out of any monies that belong to the deceased person’s estate. There is no guarantee that matters will be handled this way, but as a precaution, it is best to speak to a professional first.

Update a will or trust

Keep in mind that the surviving spouse’s trust or will also may need to be changed. This is especially true if the living spouse intended to leave all of their assets to the spouse who has just departed. It is important to select a new beneficiary right away for things like life insurance policies, retirement plans and other investments.

When grieving, wealth education is empowering

Overall, the period of time immediately following the loss of a spouse is devastating. Amidst a sea of emotions, handling financial affairs can be a daunting task. This is a good time to lean on someone who is trustworthy and capable of helping with these matters. Always keep in mind that a personal loan or a cash advance is available to assist with immediate financial needs, which can make a world of difference when in the midst of such an upheaval. Finally, although the road ahead may seem difficult to navigate alone, it is not impossible. Although it is not the answer to every problem faced during a period of grief, a good financial education can empower a person to take the steps needed to begin rebuilding their future, once again.

Photo from Picasa

Poor Debt Management Can Affect Generations

Most who struggle with personal finance, debt and credit issues do so because they never learned how to properly budget money. It is likely that these same people have more than one parent, siblings and other close relatives who also have personal finance debt issues. Most never learned to differentiate between needs and wants or are not very disciplined in spending accordingly. Left unchecked, such behavior has caused individuals to fall deeply into debt. Just as in situations of physical abuse and substance abuse, the dysfunctional handling of debt and credit is often passed down to future generations. Poor financial decision making, however, is much easier to rectify than the aforementioned dysfunctions.

Everyone Has Control Over Their Own Financial Future

In looking at personal finance, debt and credit, it is important to understand that an individual has ultimate control over their destiny in any of these arenas. While many feel as though their spending is out of control, the exact opposite is true. Even if there are psychological reasons as to why a person’s personal finance, debt and credit are spiraling out of control, as is the case with shopaholics or excessive gamblers, the truth is that, with help, it is still possible to maintain control over one’s personal portfolio. Simply, a person must recognize that they have a problem, that this problem is a threat to their future and that correcting the problem is fully within their control.

Debt Education is the Answer

Once a problem is realized, a person can then begin to take steps to repair their personal finance debt by becoming educated on financial topics. More than ever before, access to financial education topics are readily available to everyone. From personal finance budget software, to local community classes, to library books written by respected authors, a full financial education is within everyone’s grasp and most resources are free of charge. Keeping this in mind, a great place to start one’s financial education is with the basics of understanding how to create a personal finance debt budget and to understand how credit works. This can be learned by combing the Internet and reading various articles written on the subject or books can be checked out from the library to gain a basic understanding.

Low-Cost Debt Counseling is Also Available

Also, several non-profit organizations offer low-cost debt counseling services. Contacting one’s local Chamber of Commerce or related public agency can help locate such services. In doing so, a debt counselor can help with creating a budget, consolidating outstanding bills and offer further resources helpful to one who is determined to regain control over their personal finance debt.

No More Excuses

No matter how a person learned to mismanage personal finance, debt or credit, there is no excuse for this type of behavior to continue. Nor is there any reason for such economic woes to be passed on to future generations. Instead, a person who is truly interested in correcting bad habits and living a stress-free financial life, will take this advice to heart and begin, immediately, to learn all there is to learn about handling their finances more responsibly.

Credit repair is possible, but only if you increase your debt literacy. (Photo: flickr.com)

Do you consider yourself to be financially literate? How about when it comes to debt – is your level of debt literacy high enough that concepts like credit repair are second nature to you? Chances are your opinion of your debt literacy is higher than the reality. This is much in keeping with a trend numerous studies have observed in Americans: their level of debt literacy is less than adequate to deal with a complex financial market where important decisions – even on the average consumer’s level – can make the difference between a lifetime of saving or an endless cycle of debt. One recent study for the National Bureau of Economic Research by Dartmouth Economics Professor Annamaria Lusardi and Harvard Financial Management Professor Peter Tufano entitled “Debt Literacy, Financial Experiences and Overindebtedness” shows us just how far Americans have to go before debt literacy and credit repair become a part of the everyday financial lexicon.

Survey Methodology

Saving, investing and being prepared for retirement are vital elements of financial health and well-being. However, runaway personal debt and a widespread lack of basic debt literacy understanding tend to take the place of the more positive aspects for many Americans. What the authors attempt to do with their study is to examine the connection between financial literacy and debt. As the authors see it, debt literacy amounts to “the ability to make simple decisions regarding debt contracts, in particular how one applies basic knowledge about interest compounding, measured in the context of everyday financial choices.” To measure debt literacy, the authors worked with a market research company to create and conduct a survey that asks a broad consumer sampling three questions designed to assess their understanding of basic debt literacy concepts like compound interest. The questions were intended to be solved via reasoning alone, so they were simple enough that calculators were not needed. Afterward, participants were asked to rate their own knowledge of debt literacy.

What Did They Expect to Find?

If numerous studies on the financial knowledge of the U.S. consumer were any indication, it wasn’t going to be a fairy tale ending. Douglas Bernheim documented Americans’ lack of financial knowledge as early as 1995. They fail to understand basic financial concepts, “particularly those relating to bonds, stocks, and mutual funds,” and are quite fuzzy on such things as terms and conditions on large-scale loans and mortgages. This trend looks to continue on into the future, as a National Council on Economic Education study of high school students shows “a widespread lack of knowledge.”

Is this a uniquely American phenomenon? Sign point toward “No,” as a survey of Health, Aging and Retirement in Europe (SHARE) indicates poor scores on financial numeracy and literacy scales. Even a member of the U.K. Treasury reported that United Kingdom borrowers have “a poor understanding of mortgages and interest rates.” As a whole, studies in America and Europe show that those with a lower level of debt literacy were less than likely to have a well-developed retirement savings plan, accumulated wealth, stock investments or low-fee mutual funds. They were more likely to have more expensive mortgages, however.

Survey Questions and Analysis

Here are the three debt literacy questions utilized in the authors’ study. The first involves compound interest:

Suppose you owe $1,000 on your credit card and the interest rate you are charged is 20 percent per year compounded annually. If you didn’t pay anything off, at this interest rate, how many years would it take for the amount you owe to double?

A)     2 years;

B)      less than 5 years;

C)      5 to 10 years;

D)     more than 10 years;

E)      Do not know;

F)      Refuse to answer.

Ignoring interest compounding would lead to doubling in 5 years; someone who knew about interest on interest might have selected a number less than 5; someone who knows the ―Rule of 72 would know that it would be about 3.6 years (i.e., correct answer (ii) ―less than 5 years.). Answers above five years reflect misunderstanding of the concept of interest accrual.

Fewer than 36 percent of respondents got this one right. Considering how many people carry revolving balances on credit cards, that’s a troubling statistic, but less than surprising. Many consumers have difficulty grasping percentages and fractions, and compound interest deals with these. The authors found a particular problem in this area for respondents aged 65 and older – many can’t do simple interest calculations.

How Long Will it Take to Pay Off Debt?

That’s something else any consumer with credit card debt should know, so the authors posed this as their second of three questions:

You owe $3,000 on your credit card. You pay a minimum payment of $30 each month. At an Annual Percentage Rate of 12 percent (or 1 percent per month), how many years would it take to eliminate your credit card debt if you made no additional new charges?

A)     Less than 5 year;

B)      Between 5 and 10 years;

C)      Between 10 and 15 years;

D)     Never, you will continue to be in debt;

E)      Do not know;

F)      Prefer not to answer.

Slightly more than 35 percent of respondents knew that making the minimum payment amounts to an endless cycle (choice D). That’s it. The remainder show a less than solid grasp of debt literacy on this question. Hopefully they’ll do better with the final question.

Interest, Time and Money

You purchase an appliance which costs $1,000. To pay for this appliance, you are given the following two options: a) Pay 12 monthly installments of $100 each; b) Borrow at a 20 percent annual interest rate and pay back $1,200 a year from now. Which is the more advantageous offer?

A)     Option (a);

B)      Option (b);

C)      They are the same;

D)     Do not know;

E)      Prefer not to answer.

Only seven percent got this question correct. “Most chose a) even though the stream of payments to finance the purchase of an appliance at $100 per month in (a) has an APR of about 35 percent versus the 20 percent in option (b),” write the authors. Personally, this question threw me. As I read it, no interest is implied by choice a). But perhaps I’m missing something.

Demographics of the Debt Illiterate

The study authors found that debt illiteracy is indeed widespread. Respondents 65 and over showed the least debt literacy on the first question, while younger subjects (under 30 years of age) tended to get the first question correct but miss the final two. Gender and race divisions emerged, as did those between married respondents and unmarried. Among the unmarried, it is interesting to note that those who list as being divorced, separated or widowed performed at a lower level than those who had never been married. Surprising no one, respondents with higher income (particularly those earning $75,000 per year or more) scored higher than those in lower income tax brackets.

But Who Thinks They’re Literate?

On a scale from 1 to 7, where 1 means “very low” and 7 means “very high,” the study authors asked respondents to rate their financial knowledge. The average overall score was 4.88, and most considered themselves to be at least above average. Over half of those surveyed marked themselves as a 5 or 6, while only a wink over 10 percent actually chose 4 or lower. Rankings tended to mirror the demographic groups found in the three-question knowledge portion of the survey, but there were two notable differences. In particular, the over 65 age group rated themselves highly but scored lower at an average of 5.3, while the divorced/separated/widowed did the same but clocked in at only 4.79. Again – surprising no one – those who rated themselves high on average had higher incomes and accumulated wealth.

Four Clusters, Four Levels of Debt Literacy

The authors identified four distinct groups among the survey respondents. On one end of the scale are the “in control” group, comprising 26 percent of the sample. They are “firmly engaged in the traditional financial system. These individuals all have credit cards, but do not carry any revolving balances. They have relatively high (but not the highest) levels of experience with mutual funds, stocks, and bonds. They also had the highest incomes. On the other end are “fringe” users who partake of alternative financial services more often, such as payday loans, tax refund loans and pawn shops. Their likelihood of having ever invested in a stock, bond or a mutual fund—or held a mortgage—is about one fifth that of the “in-control” sample.

The middle groups make up what the authors claim to be 43 percent of Americans. The “borrower/saver” group (12 percent) has “the highest level of experience with savings and investments of any of the four clusters, with 98 percent having experience with savings or CD products, 83 percent owning mutual funds, 83 percent owning stocks, and 65 percent owning bonds or savings bonds. They are more extended than the “in control” group in that 95 percent carry revolving credit balances. The final 31 percent are the “overextended” group, who have “less experience with savings and more markers of extended credit.” They typically only pay the minimum on credit cards and have much more experience with penalty fees and much less with stocks and bonds. The authors consider this group to represent the “average American.”

Know Your Debt Level

This is the final question the authors asked participants:

Which of the following best describes your current debt position?

A)     I have too much debt right now and I have or may have difficulty paying it off;

B)      I have about the right amount of debt right now and I face no problems with it;

C)      I have too little debt right now. I wish I could get more;

D)     I just don’t know.

In November 2007 when the data was initially collected – barely predating the recession – around 40 percent of respondents had a negative relationship with debt. It seems likely that the numbers would skew even higher.

Lack of Education Will Cost You

That’s exactly what is found with Americans in credit card debt. Those who the authors found to be less financially knowledgeable tended to pay higher fees and finance charges. In fact, the authors estimate that a third of the costs such consumers pay on credit cards are a direct result of a paucity of debt literacy. In total, credit card holders paid $26.8 billion in penalties. Those less educated financially educated make up about 28.7 percent of the cardholder population, but account for a whopping 42 percent of those charges.

Richness of financial experience and a healthy amount of financial and debt literacy are the true recipe for accumulating wealth and approaching credit repair. Considering what Lusardi and Tufano found in their study, this “widespread lack of financial skills” is something America should be concerned about. Making financial education a mandatory part of school curriculums everywhere would be a good start, because what you know is more than worth its weight in gold.

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Online resources can provide financial education.

Our modern economy is extremely complex, and there are many ways that you can use your money beyond simply exchanging it for goods and services. In fact, learning about all the options and opportunities that are available can be an incredibly daunting task. However, taking the time to acquire a financial education can – and frequently does – pay very real, tangible rewards to those who go to the trouble.

Knowing how to use you money for maximum benefit and how to make it grow is truly one of the primary differentiating factors between successful people and others. The old maxim “knowledge is power” is fully applicable to money management regardless of your financial situation. Effective money management and taking advantage of the opportunities available can benefit people in any financial position, from someone making minimum wage to the extremely wealthy.

Where to look to get financial education

Many people get their first introduction to the concept of money management from school. Both high schools and colleges usually offer a wide array of courses that focus on various aspects of how the economy works and how you can both manage and invest your money to achieve desirable results. However, this is just an introduction to the concept. Students who go on to major in business or finance obviously learn a lot more about financial opportunities than other students do, but this is not the only way to acquire a financial education. Today there are many resources available to help anyone and everyone learn more about how money works and how to use your money more effectively, whether or not you have a background in business or finance. This is even more common today, in the current economic climate, where many people are looking for ways to make every dollar go further.

Government resources

There is an enormous number of government resources available to the general public that can help people learn about various aspects of money management as well as various opportunities and government programs that might be helpful. In fact, virtually every government agency – both federal and state – that deals with financial matters offer consumer tips and resources to the general public. There are so many resources available from the government that frequently they have to create special divisions that serve as a portal to educational resources. For example, the federal government has the U.S. Financial Literacy and Education Commission (mymoney.gov) that attempts to put many of the federal government’s education resources under a single umbrella. Further, if there are specific ideas or concerns – for example, taxes or securities – one can look at the websites of the government agency that oversees these topics and one is bound to find a lot of educational resources available.

Non-profit organizations

Beyond government resources, there are also many local, state, regional, and national level non-profit organizations that specialize in helping average Americans acquire financial literacy. Some of these focus on broad, general topics such as the National Endowment for Financial Education or the Foundation for Financial Planning. There are also many more specialized non-profits that help people learn more about particular aspects of financial literacy, such as issues related to buying a home or credit card debt. Almost every metropolitan area in the United States has one or more of these non-profit organizations and local ones are particularly helpful because they have a better understanding of local conditions and local opportunities that may not be available to people living elsewhere. Many of these non-profits have brick and mortar offices that you can visit and even run free – or inexpensive – classes and seminars for people wanting to learn more about effective money management.

Online resources

Both the government and non-profit organizations provide much of their information to the public via the Internet, but there are also many other resources to be found online. Many of these include free tools and resources that you can use to help make more prudent financial decisions, such as the famous mint.com. You can also find a lot of interactive resources online that you can use to get very specific information about various topics related to money management and prudent financial decision making. However, when looking online one has to be careful about the information that you find. There is a lot of mistaken, outdated, or outright false information online, so if you come across resources or advice that you would like to use, it is essential that you take the time to determine whether this material is valid or not.

He wants to teach your kids about money. You should listen, too. (Photo: DIC Entertainment)

What have we learned about the way people handle money lately? Loose and lazy seems to be the general rule in America, in that people don’t tend to plan as much for the future as they should and operate on instant gratification. Lack of impulse control is common. Yet the current recession has been a deep, dark, truthful mirror of sorts, not only for ourselves but for our government. Just as we must manage our money well and make informed decisions, the government needs to do the same and stop shoveling problems under the rug. Hopefully, the Obama administration will start breaking some of the old ways.

But what about us?

Payday loans and unsecured loans offer short-term help, but what should we do over the long haul? We should look to any sources we can find to teach ourselves and our children about finance. First and foremost, it should be part of the core educational curriculum from a very early stage in schools.

However, there are other tools. For instance, Warren Buffett, the mastermind investor of Berkshire-Hathaway, has agreed to lend his voice to a new animated series called “The Secret Millionaire’s Club.” The idea behind this is to “get children to grasp basic finance lessons well before they do things like, say, agree to a risky, adjustable rate mortgage,” reports The Huffington Post.

Here’s Buffett’s idea

If we can get through to some young people, say it’s better to be ahead of the game than behind, watch out for credit cards, most important message is the best investment you can make is in yourself. Teach them if something is too good to be true it probably is. So if they learn those things the easy way through these stories early on it may save them learning the hard way later on.

He’s definitely enthusiastic about “The Secret Millionaire’s Club.” Here’s a recent CNBC interview:

Stock market looking up

People need to know about these kinds of things. People want to know what’s going on with the stock market. Specifically, whether or not they should start investing again. On that matter, Warren Buffett has had good things to say. Now that the Dow has hit 9,000 for the first time since January, he’s weighing in: “I would much rather own equities at 9,000 on the DOW than have a long investment in government bonds or a continuously rolling investment in short term money now. Again, I don’t know where it’s going to go next week or next month.”

So according to Buffett, investors should invest now. Business may still be flat, but as Buffett puts it, “If you wait until you see the robin, spring will already be over.”

Short term money?

Payday loans and unsecured loans are short term money. If your budget has a real need for that kind of boost, you can apply right here, right now. And be sure to check out “The Secret Millionaire’s Club” when it hits a computer or television near you.

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