A Call for Economic Rehab
Emergency surgery continues on the economy. The prognosis remains up in the air. My big question is what we'll do once we're discharged from the hospital? We need a serious economic rehab regimen across the board. We can't go back to our unhealthy ways - systemically or individually. I hope we understand and appreciate that we have to do the equivalent of eating better food, exercising, and taking our medicine (bitter as it may taste). At the macro level, the presidential campaigns have at least acknowledged that we need serious reform. I think the American people are ready. I hope we're ready at the micro level, too. At the risk of beating this health metaphor to death, I want to touch on preventative healthcare - i.e., personal financial education. I'm really surprised that it has not been a bigger part of the campaign conversation. Financial education acts as preventative care for a number of economic ailments. We need to place a greater emphasis on fostering financial literacy in this country. As we sit in the hospital freaked out over the future of the economy, some of what we see is symptomatic of our low levels of financial literacy. I'm not saying that we should all be able to understand derivatives. Instead, all of us should have a foundational understanding and the requisite skills that help us maintain our financial health. Now, my diagnosis is NOT a screed against homeowners struggling to pay their mortgages and avoid foreclosure. But as a society our defenses were down against cancerous mortgages. We didn't ask enough questions - of others and ourselves. A financially-literate person may not fully understand the intricacies of the many mortgage options but will know enough to ask the right questions of the right people. It's a combination of being reflective (What are my goals? What is my current state of financial health?) and being proactive (What should I do to reach my goals? Who might help make a wise decision?) that leads to sound decisions. And that's the ultimate goal of financial education - knowing what to do AND doing it. Of course, that doesn't just happen overnight. Like preventative healthcare, financial education must start at a young age, building on that foundation as our financial needs and challenges change. Establishing reflective and proactive habits early prevents a lot of bad decisions later in life. In financial education, opportunity costs represent those things we miss out on by choosing to spend our time and/or our money in certain ways. I think we've seen the costs of not taking the opportunity to emphasize financial education. Maybe this will be the classic wake-up call - the turning point at which we vow to get ourselves healthy. Bruce Nofsinger is owner of a Charlotte communications firm called Topics Education. He leads the company's Financial Education division.