Money Talks, But Blissfully Ignorant Are Financially Deaf!

With a series of studies showing that way too many Americans are clueless when it comes to the financial basics of day-to-day living, it's no wonder hardly anyone understands insurance, let alone appreciates how much value the industry offers to this blissfully ignorant society.

"The upheavals in the financial markets have made us newly aware of how much depends on our financial security--and also how little most Americans understand about financial markets, or even personal finances," according to Maurice Black and Erin O'Connor, research fellows at the American Council of Trustees and Alumni, writing in the March 8 "Newsday." (Click here for the complete article.)

The problem starts in our schools, they note, lamenting that "younger Americans are deplorably uninformed about economic and financial matters."

Nearly two-thirds of high school students cannot pass a basic financial literacy test, the authors noted. And older folks aren't much better, as they cited a 2008 Intercollegiate Studies Institute survey that "revealed stunning levels of economic ignorance among the American people as a whole."

--Only 16 percent could differentiate free markets from central government planning.

--Less than 30 percent understood the relationship between taxes and government spending.

--Less than 40 percent knew what sort of fiscal policy would produce economic stimulus.

Meanwhile, astonishing numbers don't know the most obvious basics of personal finance, such as how a credit card works, how to read a bank statement, balance a checkbook or pay a bill!

I have blogged about this societal failing before, urging insurers to offer themselves as guest instructors to brief high school and college classes about the basics of insurance. But insurance is rocket science compared to credit cards, checking accounts and the like.

How have we allowed our society to become this stupid? With all the money spent on an army of teachers, guidance counselors and administrators, all geared to preparing kids to function in a normal life, how can it be that so many are so ignorant about the most basic financial skills?

Perhaps President Barack Obama, given the historic nature of the financial crisis we are in, can create a group of financial teachers via AmeriCorps to start bolstering basic economic literacy across the country. Insurance company and agency officials could be deputized to take part, explaining the vital role this industry plays in their own communities.

Given the fact that fewer than 30 percent of students receive even one week's worth of financial training during high school, according to the "Newsday" article, and that only seven states made personal finance education a requirement for high school graduation, any additional support in this area could make a huge difference.

What do you folks think?