Even now, as the dust from the financial crisis settles, there's surprisingly little agreement on what just happened. As the banks, mortgage brokers, financial-products innovators, and regulators argue over who deserves more blame, it's obvious that a vast number of American consumers were simply out of their league. They spent more than they earned, willingly signed up for trip-wired housing loans, and piled on debilitating levels of credit-card debt.
If you're reading this, you're probably fluent in the language of money. But as the Federal Deposit Insurance Corporation announced late last year, more than 25% of U.S. households are unbanked (with no accounts at all) or underbanked (making use of alternative financial services such as check-cashing services and payday lenders). Even before the crisis hit, 70% of Americans were living from paycheck to paycheck. Those among us who were never taught the fundamentals of money are living at a huge disadvantage in this increasingly complex age. But there's a way to change that: Make financial literacy the next civil right. If this handicap were to fade, a very real drag on the entire economy would be lifted. As a side benefit, predatory lenders would have to find a new line of work.
In order to fix this problem, we need to quantify and track it, which is why Operation HOPE, the financial literacy nonprofit I founded, teamed with Gallup to begin to meet this need. The Gallup-HOPE Financial Literacy Index, first announced on Apr. 7, will build on the Gallup Student Poll of over 70,000 participants in grades 5 through 12 in 18 different states to yield hard data on how many American youths have held a job or a savings account. It will tell us how many have a general understanding of what it takes to run a business and how many hold a positive view of free enterprise and envision themselves taking part in it.
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