So last night I was doing some random surfing on the web and I came across an article that, in my opinion, accurately portrays the goal of Take Charge. Catherine Clifford, a staff writer at CNNMoney.com, wrote an article entitled “Befuddled by debt? You’re not alone…” about how two recent studies suggest that Americans in general are “financially illiterate”.
Clifford talks about how in one study, 1000 participants were surveyed on basic personal financial knowledge. One of the basic concepts of finance, compound interest (the concept of adding accumulated interest back to the principal, so that interest is earned on interest from that moment on according to Wikipedia.com) was accurately described by less than 40% of the participants. Clifford interviews a few different financial experts about the dangers of being financially illiterate and how that correlates to being caught up in debt.
Bob Neuhuas, the executive vice president and the head of the financial services sector in the U.S. for TNS, “If financial literacy was higher, you would see more caution in the use of consumer debt. It would not eliminate the problem, but it would mitigate [it].” The most alarming notion I took away from this article is describe through the following quote provided by Annamaria Lusardi, a Professor of Economics at Dartmouth College. She stated, “even those with a college degree don’t have an understanding of the basic finance ideas.” Unfortunately, this is true.
I must admit, after reading this article and while writing this excerpt, I had to go to Wikipedia.com to look for a specific definition of compound interest. As an accounting major, I am more than familiar with this concept; put a blank piece of paper in front of me, a few numbers, your interest rate and I will be more than happy to crunch some numbers out for you. But as this article kind of points out, I think it is a lot more difficult for college students to apply these basic concepts we learn about in school to everyday circumstances.
That is where Take Charge comes in. Hopefully, this site will serve as a medium for young adults and the financial world, making that transition from school learning to real life just a bit easier. It is this site’s goal to take the financial world, dissect the most important parts, put it on a grill, cook it to your liking, and spoon feed it to you so there is no fuss, no misunderstanding, and no dislike of the taste that is finance.
There is a lot more interesting, and admittedly repetitive and boring information in this article. If you want to check it out:
“click here”ß http://money.cnn.com/2008/02/26/pf/financial_illiteracy/index.htm
