Question: What is involved in navigating personal finance today?
Carrie Schwab: Lack of financial literacy in this country [USA] is really that, or the terminology or the definition, it is very broad based, it is about how to budget your money and live within your means.
It is about saving a certain portion of your income for your entire life.
It is about managing credit card debt. Even not having more than say 36% of your income and all and asset or income in any type of two much debt.
It means also having proper insurance and having a will.
So it cuts across so many different factors of your life and if anything gets out of whack, it can really ruin personally financially.
Financial literacy is broad based knowledge around all aspects of finances in your life personal finances. And it is the under pinning or the foundation of what we call financial fitness.
First you have got to have the knowledge, but then you have to behave and act properly or yeah properly around this knowledge.
That means saving for entire life that means keeping within your budget, that means not getting in to too much debt. So you want to have the knowledge and you want to have the behaviors and that is what creates fitness financial fitness. And a thirty year old made his financial fitness may be very different and say a 55 or 66 year old.
Recorded on: March 27, 2008