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<p class="wp-block-paragraph">April 2021 is Financial Literacy Month. Now in its eighteenth year, the month has kept its focus on the original goal, as stated in the original 2004 Senate Resolution: </p>



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<p class="wp-block-paragraph">“to raise public awareness about the importance of financial education in the United States and the serious consequences associated with a lack of understanding about personal finances.”</p>
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<p class="wp-block-paragraph">President Biden has also proclaimed April to be National Financial Capability month, saying: </p>



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<p class="wp-block-paragraph">“High-quality financial education should build on and respond to people’s individual strengths, circumstances, and needs in order to help them work toward their own unique goals.”</p>
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<h2 class="wp-block-heading">What is “Financial Literacy”?</h2>



<p class="wp-block-paragraph">There is no single measure for financial literacy. Google “financial literacy quiz”, and you could spend an entire day taking tests. </p>



<p class="wp-block-paragraph">For example, the National Financial Educators Council has created a half-dozen quizzes that ask general awareness questions on a wide array of topics (including <a href="https://www.financialeducatorscouncil.org/national-financial-capability-test/" target="_blank" rel="noreferrer noopener">standard</a> and <a href="https://www.financialeducatorscouncil.org/advanced-financial-education-test/" target="_blank" rel="noreferrer noopener">advanced</a> versions).</p>



<p class="wp-block-paragraph">About 59% of more than <a href="https://www.financialeducatorscouncil.org/national-financial-literacy-test/" target="_blank" rel="noreferrer noopener">60,000 test-takers</a> passed the standard test referenced above, and the average score was 68%.</p>



<p class="wp-block-paragraph">But what makes a particular personal finance topic relevant — paying off debt, owning a home, planning for retirement, and more — depends on the circumstances each person faces and the tools they have at their disposal. These, of course, can vary.</p>



<p class="wp-block-paragraph">So, while quizzes like these are a fun way to gauge general awareness about financial topics, they aren&#8217;t the best measure of literacy on an individual basis. What, then, does it mean to be “literate?”</p>



<h2 class="wp-block-heading">Bridging the Gap Between Knowledge and Action</h2>



<p class="wp-block-paragraph">Financial knowledge can equip a person to make more informed decisions. But without action, knowing about personal finance adds nothing to a person’s net worth. A person who saves 3% of their salary in a 401(k) but who isn’t confident they know how a 401(k) works is probably better off than a person who knows every detail about 401(k) accounts but who has no savings and has no plan to start.</p>



<p class="wp-block-paragraph">In a sense, a person achieves literacy when they implement financial knowledge into their life in a tangible way. It’s similar to learning a language: Memorizing vocabulary words on flash cards is an important step in learning, but it takes more than a vocabulary to have a conversation or become fluent.</p>



<p class="wp-block-paragraph">PERA offers members a variety of tools and resources to bolster financial literacy. One way to help understand what’s available is to think about each resource as either education-oriented or action-oriented. A few examples are shown below:</p>



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<figure class="wp-block-table alignleft"><table class="has-white-color has-text-color has-background" style="background-color:#e9fbe5 color:#ffffff;"><thead><tr><th><strong>Education</strong></th><th><strong>Action</strong></th></tr></thead><tbody><tr><td><br>PERA partners with employers by offering free workshops about how to make sense of investing.</td><td>PERA members can enroll in a PERAPlus 401(k) with their employer or in PERAPlus 457 directly online.</td></tr><tr><td>PERA offers webinars about planning for retirement.</td><td><br>Refine your own individual retirement plan. Meet with a PERA representative if you have additional questions about your PERA benefit.<br></td></tr></tbody></table></figure>



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<h2 class="wp-block-heading h4 text-black"><strong>The Importance of a Plan</strong></h2>



<p class="wp-block-paragraph">Financial literacy is important. While it takes more than simply memorizing financial principles to reap the rewards, having a baseline of knowledge is an invaluable part of becoming financially secure. Not surprisingly, a lack of financial knowledge is a <a href="https://www.thebalance.com/overcome-excuses-and-save-money-4129534" target="_blank" rel="noreferrer noopener" class="broken_link">common</a> barrier to getting started.&nbsp;</p>



<p class="wp-block-paragraph">So in recognition of Financial Literacy Month, go ahead – take an online quiz. Test your knowledge against others. But when you’re done, go a step farther. Strive for true literacy. Keep learning, and find ways to apply what you know.</p>


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Making Sense of Financial Literacy