The Importance of Financial Literacy in Creating Sustainable Futures

importance of financial literacy

Anyone who first learned financial literacy skills later in life knows the importance of early education firsthand. Not only are they behind the ball when it comes to retirement savings, but they feel pressure to catch up. It’s a tough spot to be in. Teaching youth to get ahead of the game will help prevent them from facing an uncertain future. 

The importance of financial literacy cannot be overstated. Learning and practicing financial literacy concepts at a young age is one of the most important life skills. Let’s look at some reasons for becoming financially literate and why it’s so important to invest in building these skills early.

The Importance of Financial Literacy

There are many benefits of financial literacy learning at a young age. First and foremost, we need to be financially literate to get the things we want out of life. It takes some knowledge to invest and save for those things, so it’s best to start young. Secondly, there are a lot of aspects of our world that are constantly changing. That level of change can cost us a lot of money. It is becoming more and more important that our young people prepare for those changes.

Understanding the importance of financial literacy is the first step. But the importance of financial literacy stretches beyond just finances. Learning to make good decisions delivers positive impacts across every corner of our lives. So, what is the purpose of financial literacy in preparing for those extra changes? Let’s look at some major changes that are creating economic turmoil in our society.

Increasing Life Expectancy

Humans are living longer on average than we have at any point in history. This is due to a combination of things like modern medicine, food safety and social welfare programs. A longer life expectancy means we’ve likely got to prepare to afford an extra few years of life. We used to rely on things like social security, savings and homeownership to get us by. They aren’t always enough anymore. 

Strained Social Security Systems

With the increased strain on our social security systems, we’re being forced to prepare to take care of ourselves. That means thinking beyond pensions and Medicare. Employer retirement plans may not cover all costs in an increasingly expensive economy. Similarly, Medicare doesn’t cover all medical costs. We’ve got to fill that gap somehow. Understanding the importance of financial literacy and practicing its principles will give us the skills to cover those costs.

Increasing Wage Gaps

There was a time that working for one of the nation’s largest employers provided great financial protection for the future. These companies offered solid benefits, a pension program and job security. Even the least educated among us could work until retirement age and have a safety net to carry us through. This is no longer the case.

Some of those bulletproof businesses went under due to a shift away from brick and mortar stores. Others made bad investments and couldn’t afford to continue providing employees with a lifetime of benefits.  Jobs are also becoming increasingly technical. Those who don’t have the right skills are stuck with low wage jobs. No matter which category we fall into, a solid understanding of economics and financial literacy is essential to creating a sustainable future.

cost of climate change

Climate Change and the World Economy

Another large part of dealing with our changing world involves preparing for the economic implications of climate change. When it comes to climate change, economic impacts are far reaching. We all know that climate change is affecting our coastlines and weather. But did you know that it also has an effect on our pocketbooks? The economic impacts of climate change will significantly increase the importance of financial literacy in the future. Here are a few reasons why.

Disruptions to Agriculture

Of all the industries affected by climate change, agriculture may be dealing with the most devastating blows. Over the past few decades, we’ve seen spring rains bring floods to the middle of the country. We’ve also seen a historic drought suck the water out of the American southwest. Each of these catastrophic water events causes billions of dollars worth of damage annually. They also underscore the importance of financial literacy.

The most immediate impacts of severe weather events on agriculture are delayed planting and lost crops. When fields flood in the spring, planting gets delayed. If farmers can’t plant crops quickly enough to harvest before the winter, they may not plant at all. Each crop that doesn’t get planted reduces supply. That means lost income for farmers and likely food shortages for the rest of us. 

Drought can be just as costly. When farmers sow their seeds in the spring but don’t get enough rainfall to cover fields in summer, crops die. That shortage means some foods become unavailable, and others become prohibitively expensive. The only way for farmers to keep afloat in such an atmosphere is to pass those costs along to consumers. This is a major financial impact of climate change that we’ll all have to bear in the future.

Climate Change Threatens the Places We Live

Nearly every place where people live is currently experiencing new dangers associated with climate change. No region is completely immune. Understanding the financial risk of climate change is key to coming out of emergency situations financially intact.

Americans have long invested in homes and real estate. It can be a great way to build your net worth and hang onto more of your hard earned cash. Unfortunately, climate change is making this practice riskier than ever. Climate change is increasing the possibility that severe weather could wipe those investments out with a single storm. It’s important to be prepared for these potential eventualities and invest accordingly.

If you live near a coastline, as the majority of Americans do, rising sea levels may be your number one concern. In the middle of the country, maybe it’s an increasing occurrence of stronger, more frequent storms. A best case scenario leads us to pay a whole lot more in insurance premiums. A worst case scenario leaves us abandoning our homes and biggest investments with whatever personal belongings we can scavenge.

Either scenario is a costly one. Many of us, especially young people, don’t realize this is something we need to prepare for. Those who don’t understand the importance of financial literacy now may not be ready to cope with the cost of climate change in the future.


Much of our national infrastructure is already in dire need of improvements. Roads, bridges, and buildings are getting old and crumbling. As climate change risks accelerate, the demand for improvements will only rise, having serious impacts on anything from roads, to hospitals and military bases.

If our roads and airports are severely damaged, it affects our transportation. Not only does that increase costs associated with upkeep and repairs, but it can affect our food supply as well. Vehicles carry more than people. The vast majority of our food is transported by truck. Vital medicines are often transported by plane. Disruptions can quickly grow costly.

Our infrastructure is not limited to carrying physical objects either. Our communications networks are built on an infrastructure of coaxial and fiber optic cables, and both can be vulnerable. Even though they are constructed to be very water resistant, they are not waterproof. Furthermore, things like tornadoes and earthquakes can wreak just as much havoc. Communications infrastructure built near coastlines and roadways are particularly vulnerable. When those cables get damaged, it does significant damage to our means of communication. In an always connected world, that’s a hard pill to swallow.

The Financial Sector

Climate change and financial risk go hand in hand. Money makes the world go round, and every investment is backed by the financial sector. Big banks give us loans to buy property, and insurance companies cover it from loss. With each hit our essential industries take, the costs go up. Uncertainty in business makes investors nervous. If there’s a good chance your home or business will end up under water, financial institutions become hesitant to help.

Climate change increases the chances that all our investments could potentially fail. Being prepared and calculating your risks is the best way to protect those investments. Understanding how climate change and economy are intertwined is the best place to start.

Preparing our Youth

While it’s important for everyone to be financially literate, it’s especially important to those who will likely be around awhile. Young people will have to deal with our changing world longer than older people. They need to be informed. Teaching the importance of financial literacy in schools is an essential part of preparing the youth for an uncertain future.

Not all schools have financial literacy educators on staff. Many don’t even teach basic financial awareness. That can be a problem for students in those schools, but it doesn’t have to be. Luckily, there are options.

Educational Outreach Programs

One of the best ways schools can bridge the financial literacy gap is to bring in professionals. Partnering with an educational outreach program allows students to discover why financial literacy is important, as well as building financial literacy skills. Instructors are well versed on the effect of global warming on economy sectors across the board. To sponsor a program is to provide a financial foundation for future generations and solutions for our changing world.

The National Theatre for Children offers a comprehensive financial literacy education outreach program that helps build a financial literacy foundation for youth in grades K-12. 

Teaching the Importance of Financial Literacy

At the end of the day, the most important thing we can do is teach youth the importance of financial literacy at home and school. It doesn’t always need to include intensive training either. Simply reading more articles about financial literacy and having constructive discussions can go a long way. 

Becoming financially literate means learning a little every day. It means putting principles to practice. The earlier we can get students started in building their financial literacy foundation, the more successful their life journeys will be.

The Importance of Financial Literacy in Creating Sustainable Futures