Financial Literacy Paper

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There are just as many websites dedicated to providing assistance with credit card debt, reverse mortgages, investments, estate planning, college planning and other financial topics. The best resource will be someone who is licensed and trained to provide financial advice. The Financial Planning Association® website would be a great place for a consumer to initiate their search for financial information and to search for a financial planner. The Financial Planning Association® is the principal professional organization for CERTIFIED FINANCIAL PLANNER™ (CFP®) professionals. The association provides leadership for financial professionals and serves as an advocate for consumers. The FPA® website provides consumers with valuable information pertaining …show more content…
While many agree that early education is one way to address financial literacy, some suggest that the cost of financial education may not outweigh the benefits. Others suggest that understanding and addressing one’s reason for financial behavior is a more useful approach to improving financial decisions. Lusardi (2009) found that individuals who were born in states that mandated financial education in high school were more likely to display financial knowledge later in life. Her research identified a strong positive relationship between financial literacy and retirement planning. Based on this relationship, there may be advantages to introducing financial literacy at the high school level (Lusardi, 2009). Financial education programs are another option for promoting and improving financial literacy, especially among baby boomers. But, financial education programs don’t guarantee that the participants will change their behavior towards retirement planning. Huston (2010) states that financial literacy only identifies the human capital required to engage in appropriate financial behavior, but improving financial literacy does not guarantee that an individual will engage in the proper financial behavior. Lusardi (2009) identified that financial education programs seem to affect the intentions of workers; but the intentions do not always translate to actions. Huston (2010) also stated that financial education is intended to increase a person’s financial literacy but a person who is financially literate may not exhibit predicted behaviors or increases in financial well-being because of other influences such as self-control problems, behavioral / cognitive biases or peer pressure. The main cognitive biases that are relevant to financial decision-making are procrastination, aversion to loss and regret, mental accounting and difficulty processing
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