Financial Literacy the Key to Independence

In the Mackinac Center’s most recent bimonthly magazine IMPACT, my colleague Michael LaFaive has an interesting piece dealing with personal finance. It is worth extrapolating on some of the points.

In the article “Will Financial Illiteracy Harm Future Voters?” LaFaive wrote:

Up to a point, money is liquid freedom. Sound money management by individuals is a necessary tool to sustain a free society. Money, if earned and maintained, can fund a year volunteering in Guatemala, or fund a comfortable retirement for Mom and Dad, or maybe even simply support a favorite coffee shop. Money, when used to create the life of one’s own choosing, gives government one less reason to tell someone how to live.

The concept of “money equals freedom” is a key point, especially for young people.

For the most part, money and wealth aren’t obtained simply because people are greedy — it is sought so that people can have the freedom to do and have what they want. This may mean a family, a home, a car, going out on the weekend, traveling, retirement, etc.

For most people, these things are not simply given; they have to be earned through work and time. One blessing of living in a country with among the freest economies in the world is that it requires less work and time to earn enough for the things people generally want to do.

The best way to obtain financial independence is to save and invest and more on that can be read in the piece. But it’s important to remember that teaching these concepts is as important as ever and it isn’t going to be done by government — it is up to each of us to teach and learn the basics.