Financial literacy is crucial in today’s economy

By WAYNE CURTIS / Guest Columnist

Despite the economic recovery currently under way, many Alabamians still face a monumental financial crisis. Consumer indebtedness in the state — on a per capita basis — was the 10th highest in the nation in 2010.

At the same time, mortgage foreclosures have risen sharply, and personal bankruptcies have climbed.

Unfortunately, much of the trauma associated with the above could have been avoided. Most of the crisis arose because people made poor decisions as the result of an inadequate understanding of the fundamentals of finance. And, unfortunately, this has brought with it severe consequences for many families.

Most experts believe a better understanding of finance could have prevented or, at the very least, moderated the current crisis. A large volume of research has focused on financial literacy. The results are enlightening.

Financial literacy can help consumers make better choices. It can also have a positive impact on the credit worthiness of borrowers, especially among groups with the lowest credit scores.

In addition, individuals who are familiar with financial concepts are more likely to budget for savings, have investment accounts, and undertake similar activities. And, finally, financial literacy is the best predictor of good financial behavior in the future.

Where can you find information to increase your knowledge of personal finance? Many government agencies, private firms and nonprofit organizations offer a wide range of programs. The federal banking regulators offer some of the best information for consumers.

Both the Federal Reserve and the Federal Deposit Insurance Corporation have initiatives that promote awareness of the importance of financial literacy and provide for cooperative arrangements with educational and community organizations. They also provide an array of programs that attempt to increase consumer access to information about financial products and services.

Information is readily available from both of these agencies. The easiest way to obtain it — for those who have Internet capability — is through their respective websites: and

Wayne Curtis, Ph.D., is on the board of directors of First United Security Bank.  He may be reached at