Literacy: The Building Block for Financial Success


People often talk about financial literacy. This is generally defined as the ability to understand and use financial concepts such as saving, credit management, investing, and budgeting, as well as the ability to navigate contracts, job offers, insurance policies, warranties and all those other documents and agreements that make up a financial life. In order to succeed, you need to be financially literate enough to manage your financial affairs. 

But what conversations about financial literacy often overlook is that financial literacy begins with basic literacy. Literacy is the ability to read and write, and to understand and use written material to function in society. It sounds so simple but, unfortunately, it isn’t. Here are some statistics from the National Literacy Institute that illustrate the scope of the problem in the U.S.

  • 130 million adults are now unable to read a simple story to their children

  • 21% of adults in the US are illiterate in 2022

  • 54% of adults have a literacy below 6th grade level

  • 45 million are functionally illiterate and read below a 5th grade level

  • 44% of American adults do not read a book in a year

See the problem? If you can’t read and write at a basic level, reading a story to your kid is the least of your problems. An illiterate person can’t even begin to understand leases, credit terms, student loans, contracts, banking agreements, or insurance policies. They can’t read and understand books and other materials that teach the basics of personal finance. As a result, it’s practically impossible to lead a financially responsible life. 

Moreover, the problems spill over to work. Job offers can be incomprehensible. An illiterate person can’t easily understand instructions on the job, or communicate instructions to others. It’s difficult to study and pass the tests necessary to advance their career through education or certifications. They can’t craft a strong resume, or communicate/negotiate with others. Employment and advancement options are limited, which simply compounds financial problems. 

Not only does all of this this leave an illiterate person at a serious financial disadvantage, it also leaves them open to scam artists and predators. How many have fallen victims to car dealers or other scammers who, when prompted to further explain the contract say, “Don’t worry, it’s fine, just sign here.” How many have taken scam jobs because they couldn’t understand what was really being asked of them? And we all know someone who’s been taken in by a get rich quick scam or a flim-flam artist hawking some “revolutionary” product or ponzi scheme.

It’s never too late to improve your reading and writing skills, or to help your children improve so that they don’t start out at a disadvantage. (Sadly, schools are not always very good at teaching reading, writing, and reading comprehension. Much of that must fall to the parents.) If you or someone you know needs a literacy boost, here are some ideas. 

Continuing Education

Depending on the severity of the problem, you or your child might benefit from some continuing education classes, tutoring, or local literacy programs. There are lots of free or low cost programs sponsored by libraries or volunteer groups, or taught at local community colleges or through extension programs. There is absolutely no shame in asking for help. You’d ask for help if you wanted to learn any other skill in life. Literacy is no different. 

Model Reading for Your Kids

Kids learn by observing the adults in their life. If you make reading and writing a priority, they will learn that it’s a valuable activity. Always have books in the house and read in front of your children. Read to your children when they are little and encourage them to participate as their skills grow. Set the example for them to follow. 

Encourage Kids in their Reading Efforts

If your child expresses an interest in books, encourage that. Don’t say things like, “I can’t take you to the library,” or, “That’s a stupid book to read,” or, “Why would you read that when you’ve seen the movie?” If your child wants to read, do all you can to make that happen. Don’t disparage their choices or make them feel that their interests are inferior. Unless the kid want to read something that’s wildly inappropriate in some way, let them love the books that they love. (School does enough to try to kill the love of reading with forced choices, let them roam free on their own reading time.)

Encourage Kids to Write

Literacy isn’t just about reading, it’s also about writing. Encourage your child to keep a journal or write stories/poems. Letter writing is a lost art, but you can encourage them to write letters to grandma or friends who’ve moved away. (Sure, you can text, but the effort of writing an actual letter — even if you email it — boosts literacy skills far more than texting.) Find some way to encourage your child to write because the ability to string thoughts together and express them to others in a sensible order is what will help them in the job market later on. 

Make Time for Writing

You also need to make time for writing practice. Unless your job requires you to write frequently, it’s helpful for adults to keep journals or engage in some other form of writing practice.  

Challenge Yourself with Difficult Works And Deep Study

Take the time periodically to challenge yourself with a difficult book or a topic you know nothing about. The effort of making sense of new and difficult information pays off in increased literacy skills. Also, take the time to study an area of interest. Yes, Google can answer any question in seconds so it may seem silly to look any deeper than that. However, if you want to improve your reading skills, take the time to read a few books or well written articles on the matter. 

Eliminate Distractions

Don’t read with the TV on or your cell phone beeping next to you. Turn it all off and just read. If you’re looking up and down at the TV every five minutes or checking your messages, you’re simply further fragmenting your attention span. Reading with deep concentration is a good mental workout. 

Stop Skimming

Reading skills are not improved by quickly skimming a work or TLDR’ing everything. If you find yourself skimming a work, stop, go back to where your concentration faltered, and begin again. Force yourself to read and understand what you are reading, in full. 

Go back to school

Remember taking notes in school? The dreaded book report? Bring those skills to your reading practice as an adult. Taking notes forces you to slow down and identify key pieces of information. Jot down key points, words you need to look up later, character relationships, or whatever else will help you to make sense of a text. Finally, when you finish a work, make a point of summarizing what you’ve read. This gives you a sense of how well you’re comprehending what you’re reading. For example, if all you can say about Moby Dick after you’ve read it is, “It’s about a whale,” you’ve got a problem. None of this has to be formal (and it won’t be graded), but it can help with comprehension.

Make it fun

Kids and adults can find ways to make reading fun. Join a book club or summer reading program (libraries tend to offer these for both kids and adults). Take the kids to story hour, or reward reading practice with something fun like pizza night. (And yes, you the adult can reward yourself with pizza, too. And wine!) In nice weather, take your reading and writing outside. If the weather stinks, build a cozy nest and snuggle in. If you read the book, reward yourself with popcorn and candy while you watch the movie. 

Even if you are literate, you cannot sit back and take your skills for granted. Age-related cognitive decline, a culture of misinformation, and an internet that’s determined to overwhelm us with distractions and content that’s the mental nutritional equivalent of Twinkies mean that we must keep our skills sharp. Practice your reading and writing on a regular basis so that you remain literate your entire life. And if you’re blessed with great reading and writing skills, volunteer to help others improve. 

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