Financial Education Can Reduce Poverty And Help Americans Escape Its Cycle

The legacy of multi-generational poverty among American families is reaching worrisome levels. Multi-generational poverty is defined as a family having lived in poverty for at least two generations. According to the 2018 U.S. Census, 38.1 million Americans live below the poverty line while a survey conducted by the American Payroll Association found that 74% of the population is living paycheck-to-paycheck.(1)(2) People trapped in a cycle of generational poverty are focused on surviving day-to-day, not planning for the future but tackling their current situation. Jeff Mount, CEO of Real Intelligence LLC, says this can lead to a feeling of pessimism and loss of hope for the future. “Growing up in a lower middle-class household, I was constantly told I would never be able to achieve much,” Mount said. “Never be able to be a competitive athlete, never be able to attend a great college, never be able to own my own business, never be able to retire. Children in lower and lower-middle class neighborhoods hear this constantly.” In addition to feelings of hopelessness about the future and the everyday stress of how to pay the bills, people living in poverty often face more health problems due to excessive stress and lack of access to decent health care.(3) Reducing the overall rate of poverty can benefit Americans at every economic level as high rates of poverty cost the U.S. economy more than $500 billion annually in lost productivity, increased health care costs and higher criminal-justice expenditures.(4) Financial and educational experts say that one way to break the cycle of multi-generational poverty is through education.(5) Not only are states like North Carolina and New Jersey planning to include financial literacy as part of their must-pass-to-graduate curriculum this year, international policy makers have issued a worldwide call to action for more financial literacy for the most vulnerable people in our society.(6)(7)(8) “Financial literacy is probably the least recognized educational topic,” says Mount. “The education system has ignored this very critical topic for generations due to their commitment to the basics: math, science, literature and history. But financial literacy is incredibly important: it affects enormous life decisions that can impact the lives of others – in either a really positive or detrimental way. When was the last time you heard of someone negatively impacting another’s life because they failed an algebra test?”