What does financial literacy mean to you? It’s a question I can admit I’m still struggling to define myself, and I’m sure a number of people would agree with me.

While I’ve been aware of the importance of sound financial decision-making for most of my life, I’d never really heard to term “financial literacy” or “financial education” used until I began writing about it back in January. By most counts, financial literacy is defined as a having knowledge in specific areas of personal finance: savings and investing, credit, retirement planning and the like.

No sooner had I began writing about financial education, than I began to hear murmurs of dissent and criticism. This clearly came as a shock to me, since the concept in all its written forms—be it ‘financial education’ or ‘financial literacy’—seems so innocuous. How can anyone be opposed to educating people on the benefits of being financially literate? What better way is there to empower people then to provide them with the tools to be financially independent?

I also began to suspect that some even believed that if you were struggling with your personal finances then you clearly lacked financial literacy knowledge. Conversely, if your personal finance situation is looking rosy, then obviously it’s because you’d been a good pupil and did your homework. Perhaps, financial literacy was becoming one of those terms used to blame the working poor for their financial problems, while deflecting blame from many of the financial institutions that had played a huge role in extending credit to millions of American consumers without adequately determining whether or not they had the means to repay it.

Americans: Not As Financially Literate As They Think

The truth of the matter is that, regardless of one’s economic bracket, most Americans aren’t as financially literate as they’d like to think they are. While most would like to believe their financial literacy knowledge is spot on, the vast majority actually can’t even pass a financial literacy test. This speaks deeply to the problems in advocating financial education—most people don’t actually think that they need it. Instead, it’s someone else’s problem to solve, so maybe donate a couple of bucks to organization X or spend a day over at organization Y teaching a workshop about financial literacy to low-income youth and you’ve done your part to spread the gospel (this point is certainly not being made to diminish the efforts of those that do donate both their time and money towards promoting financial literacy). Because, clearly you don’t need a course in financial education, right?

I have a pretty clear picture of my own personal financial situation and know where there’s room for improvement. Yes, I have both college debt and consumer debt. For the most part, I’ve been pretty successfully at managing the debt and trying to keep my credit score up, but not without trial and error.

And, thus is the story of life—a series of experiences that can both positively and negatively impact your personal finances. If you’re lucky enough to have gone through it all debt-free with cash to burn then that’s definitely something to be proud of. But, that doesn’t automatically award you a ‘get out of jail free’ card, since financial education is as much about managing your wealth as much as it is averting or exiting potential cycles of economic difficulty.

So, in the end, I’d like to think that financial literacy simply making an honest assessment about your financial position at a given point in time and doing what’s necessary to improve that position. It’s not just about accumulating wealth, it’s also about knowing who you can turn to when you’ve fallen on hard times, or if you’ve become the victim of a scam. Most importantly, it’s understanding that everyone—regardless of your economic position—can benefit from a lesson in financial education.

Carolyn Okomo is a personal finance writer and the Tuesday columnist for MyBankTracker.com. You can follow her tweets @CarolynMBT..

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