A Financially Literate Person

The purpose of the yourcashcounts.com website is to help you either become financially literate or become more financially literate. Right away, this suggests that literacy is an evolving process and can be viewed as a “work in process”. Literacy also suggests learning that is translated into behavior.  It would be a waste of time to learn new things and never incorporate this new content, skills, and attitudes into how you think and what you do. Consequently, it should be possible to create a description of a financially literate person that specifically identifies observable thought patterns, statements, and actions that link to literacy. This insight will help people determine if they are financially literate and at what level and evaluate others as well. It should also help build and evaluate people working together in communities as they seek a financially literate environment.

INDIVIDUAL
The description of a financially literate person is derived from the premise that everyone must make choices and most, if not all, choices have a financial component. Because choice making is a universal activity and most choices ultimately result in some action, observing what people do provides valuable insight into a person’s level of literacy. The following list of observable thought and action will be helpful to individuals as they assess their literacy level and that of other people:

• Seeks clarification, particularly in regards to what question is being asked or problem needs to be solved.
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• Acts deliberately in everything they choose to do. A pause or thoughtful look precedes an action.
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• Is accepting of the fact that multiple alternatives exist for solving problems or answering question.
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• Feels problems have solutions and often seeks more than one solution.
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• Accepts the actions or choices of others even when they are different from their own.
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• Seems empowered to be in charge of their life.
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• Accepts the notion that there are no costless choices and choices have consequences now and in the future.
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• Seeks information from a variety of people but is not controlled by them.  Is willing to challenge authority.
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• Understand the value of money-theirs and others.
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• Respects hard work and expects to be rewarded for productive activity.
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• Understands that choices are often more about “how much” rather than “whether”.
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• Is questioning and evaluates choices often and is willing to change when the expected benefits exceed the expected costs.
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• Accepts the fact that life has risks and risk management is part of life.
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• Understands that most every decision has a link to ones financial condition.
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• Accepts the need to know one self and to plan both in the short and the long term.
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• Values being or becoming financially literate.

COMMUNITY
It is important to realize that only individuals choose because some people think that institutions, businesses, communities, or even nations are the decision makers. This erroneous notion keeps people from understanding why things happen and more importantly how things can change. As the description of a financially literate community develops keep in mind a valuable idea about choice making developed by Dr. Paul Heyne:

"All social phenomena emerge from the choices that individuals make in response to expected benefits and expected costs to themselves."

This quote connects social decision making to the individuals involved and helps people understand why certain choices are made and what actions need to take place to change a community based choice if the consequences of that choice are no longer desired. It also implies that many, if not all, community or collective choices have both a direct and indirect financial connection. The following list of observable thoughts and actions attributed to community based financial literacy will help determine how literate a community is:

• Individual decision makers working collectively seek and appreciate alternative viewpoints and courses of action from all citizens.
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• All citizens realize that community based decisions reflect the values and perceived incentives of the individuals that have made the choice.
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• All citizens realize that all choices (including community choices) have costs. Many times (not always) these costs are financial and monetary resources could have alternative uses.
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• Financially literate communities have both short and long term plans that are reviewed often by all interested citizens.
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• Financially literate communities have citizen commitment to sound budgeting.
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• Financially literate communities actively identify and seek non- traditional funding.
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• Financially literate communities appreciate that their citizens have varying values and life’s goals.  Consequently, compromise and conflict management is an important goal.  
       
• Because incentives matter, financially literate communities employ incentives in a manner consistent with the approved plan.
       
• Financially literate communities reflect the citizens’ appreciation of the connection between hard work and rewards.
       
• Communities demonstrate their citizens’ commitment to education and human capital by having good schools, child care facilities, parks, and training centers.
       
• Communities with a high level of financial literacy have happy people who show respect for one another.  They have smiles on their faces and communicate openly with one another.

Obviously, these lists are not exhaustive, but begin to help people realize that financial literacy is a “state of mind” that impacts much of one’s life.  It is hoped and expected that people who develop a high level of financial literacy will feel it in their heart and see it in their behavior. The yourcashcounts.com website should change your life!