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Financial Literacy Education Could Help Millions of Americans

5 minute read
McMillon is president and CEO of Walmart. Bryant is founder, chairman and CEO of Operation HOPE. For more information on the Financial Literacy for All initiatives and a full list of member organizations, visit www.FL4A.org.

Even as our country continues to move past the worst effects of the COVID-19 pandemic, supply chain issues persist, there is growing inflation, labor and wage pressure, and rising interest rates. While Americans work to make sense of all this—and plan around it—lack of financial literacy makes it difficult for many. Over the long run, this lack of knowledge puts the American Dream at risk for millions. We believe the private sector has an opportunity and a responsibility to help address this by providing employees, families, customers and communities with increased access to financial education.

There’s a big need for this kind of effort. Today, only about one-third of Americans have a working understanding of interest rates, mortgage rates and financial risk, according to the Financial Industry Regulatory Authority. And this measure of financial literacy has fallen 19 percent over the past decade. This gap is estimated to have cost Americans more than $415 billion in 2020 alone.

Lack of financial capability is impacting Americans both at home, and in the workplace. Stress over money has been linked to significant health conditions including heart disease, diabetes, sleep problems and depression. These life-threatening conditions can lead to expensive medical treatments, which in-turn creates more financial stress and worry. Financial difficulties are now the second leading cause of divorce. In the workplace, 97% of employees concede they spent time working on or worrying about finances during the workday. Stress related illnesses cost employers nearly $300 billion annually in lost productivity, and 4 of 5 workers admit to being financially stressed.

Black America continues to be particularly impacted by these challenges. More than half (54%) of Black Americans have a credit score below 640, essentially unable to fully participate in free enterprise America. Half (54%) of Black Americans also report living paycheck-to-paycheck, as compared to 44% of Americans overall. Only 43% of Blacks own their home, compared to 72% of Whites. Blacks comprise 14% of the population, but own only 3.5% of small businesses.

These are more than just statistics. Behind the numbers are real people: tens of millions of parents, seniors and young people enduring financial stress, personal hardships and strained relationships as they struggle to save, borrow and invest in ways that provide greater financial stability, flexibility and security.

To help address these issues, we’re joining together to co-chair Financial Literacy for All, an inclusive, business-led movement aimed at helping more Americans reap the benefits that come from making more informed financial decisions. We plan to empower low- and middle-income individuals and families of every background, every walk of life and every community—from urban to rural and all points in between. We will use the creative brilliance of our partners to generate excitement and awareness around financial literacy; through our partners, grow workplace wellbeing for working adults; and support initiatives to deliver basic financial education to every school district in the country. And, given the wealth gap faced by Black and Hispanic households, we will ensure our efforts are relevant and readily available across those communities.

Since launching in May of last year, the Financial Literacy for All movement has been joined by nearly thirty other CEOs and board chairs, including the leaders of The Walt Disney Company, the National Football League, the National Basketball Association, Delta Air Lines, and several other leading financial institutions.

We believe financial literacy can be inclusive, creative, flexible and focused on results, and we think our coalition’s diversity will help us make meaningful progress to that goal. Disney, after all, specializes in engaging and entertaining people through the power of storytelling. The NFL and NBA know how to attract and inspire enthusiastic audiences. Operation HOPE is focused on equipping people with the financial tools to build a more secure future. And Walmart is deeply connected to communities, with 1.6 million associates, more than 4,700 stores, serving more than 137 million customers a week across the US. Each member organization will also do more for its employees and communities.

Our shared passion for improving financial education is rooted in our purposes and values. Almost 60 years ago, Walmart was founded on the idea of helping people save money so they could live better. Since 1992, Operation HOPE has been striving to expand economic opportunity and make free enterprise work for everyone. Each of us views this new endeavor as a natural extension of what our organizations have been doing for decades.

We know efforts like these can make a difference. As just one example, Operation HOPE has been providing no-cost, personalized financial coaching and education, helping some raise credit scores 54 points in six months, and more than 100 points over 24 months, lowering levels of debt, and helping clients create and increase their savings for emergencies and the future. And, in some cases, helping strivers go from being renters to homeowners, or from small business dreamers to small business owners.

We understand that the financial challenges facing millions of American households cannot be overcome solely through financial training. Other factors are also holding people back, including barriers to education, vocational training, financial services and job opportunities as well as discrimination of all kinds. These obstacles must also be addressed—and many in the private sector are making meaningful progress.

Even so, we believe better, more accessible financial education and higher levels of financial literacy could help millions of families. This and similar kinds of work, lifts ‘all boats’ across communities and across our nation. Raising GDP through enhanced financial intelligence, benefits the whole of society, and creates more sustainable opportunity for the nation. And the added benefit—less stressed-out citizens and workers—translates into more societal health, for all. These are big goals, but we believe they can be achieved—and that’s the challenge we’ve set for ourselves. We urge other business leaders to join this movement.

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