Op-Ed: Heidi Heitkamp on the Political Lessons in Financial Literacy America Needs to Discuss

Adam Jeffery | CNBC

Ask any expert why financial literacy is important, and you will get a vigorous discussion on how financial literacy will help Americans maximize their earning, prepare for retirement, help eliminate mental health stress, and make smarter consumer decisions.

All of that is incredibly important, but what is hardly ever discussed is that financial education is critical to good citizenship. As voters we make political judgments about the economic policies of a candidate for office. How do we do that if we do not understand the basics of the tax system or the challenges of compound interest, not only on a citizen's personal budget but on United States debt and the deficit?  Financially literate voters will understand the true cost of delayed investment in essential infrastructure, the opportunity costs of government incentives in select businesses, and the excess of over-regulation and the danger of under-regulation.

Similarly, citizens who are better prepared to make good personal financial decisions will also have a smaller impact on government spending. Think of the reduction of stress on the federal budget if every citizen saved early for retirement; if every young person did a cost benefit analysis on a college education; and if every emerging new business person had the skills to evaluate the efficiency and the return on investment of their business. A person who understands the financial impact of making unhealthy life decisions and hopefully lives a healthier lifestyle, will also lower the overall cost of American health care.

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Personal financial stress depresses the American economy. According to the latest Stress in America survey conducted by the American Psychological Association, money is one of the leading causes of stress. In fact, the survey found that 72% of Americans reported feeling stressed about money at least some time in the prior month. The mental well-being of employees has a correlating impact on employee productivity and by extension on the national GDP.  This is exactly why economists and politicians pay close attention to consumer surveys like the Index of Consumer Sentiment done by the University of Michigan.

When family finances in America are healthy, our economy is healthy. And that is a good thing for the future of not only individual Americans but also America's economic growth.

Finally, it is important to not overstate the importance of financial literacy and use financial education as an alternative to enacting more structural economic changes. I call it, "They don't need a raise, they just need to be more careful with their money" argument. Really? This is where many politicians need to enhance their financial literacy. Take the $15 minimum wage debate. The current minimum wage is a full-time annual wage of $15,080. A $15 minimum wage would raise that wage to $31,200 annually.  No amount of budgeting or financial literacy will stretch that income into financial success. It could help, but it is not enough. 

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