For something that is so vitally important to all of us, money matters can be awfully hard to understand. Talk about stocks, inflation, and other financial matters can seem like another language, even if it’s all written in English. In order to empower people to take more control over their personal finances, implementing Plain Language in both private and public sector communications is essential.
April is “Financial Literacy Month.” Financial decisions – such as applying for a credit card, choosing a small business loan, or switching banks – cannot be made lightly. Individuals must be provided with all the right information and tools that they need to intelligently navigate increasingly complex financial systems. Even with access to the Internet’s other resources, many consumers still struggle to make smart financial decisions that serve their goals. Increased access to plain language can help illuminate a path towards making the most from every paycheck and achieving financial wellness.
We’ve all witnessed the dangerous impact of widespread financial ignorance. Poor financial literacy had a crushing impact on the United States economy following the market collapse of 2008. The deployment of plain language in financial disclosures won’t always prevent people from making financially irresponsible choices. However, if the risks of different financial decisions are better emphasized, it can help diminish certain instances of catastrophe.
For instance, all adults should understand that “inflation” is when the price of items increases while a dollar’s value decreases. “Assets” are items owned of a certain value, such as having the capability to pay off debts. One’s cash flow is how much money they earn versus how much they spend and is labeled on a positive/negative basis. “Risk tolerance” is a threshold based on how safe an investment is for an investor. Those are rather simplified ways to define those concepts, but they provide an entry point for discussion.
A thorough understand of credit, and one’s credit score, is also critical to maintaining a good handle on financial matters. “Consumers are often unaware of the direct impact their credit report and score can have on their financial well-being,” said Steve Trumble, President and CEO of American Consumer Credit Counseling, located in Newton, MA. “It can have a significant impact on a whole host of major life events, such as getting a job, buying a car, purchasing a home, or even renting an apartment.”
We all know someone who is burdened by at least one bad financial decision that they wish they could undo. Maybe they made an investment in a commodity that wasn’t as valuable as they thought. Maybe they took out a loan a decade ago that they’re still struggling to pay off thanks to interest. This scenario might even sound familiar, and you may be thinking – “if only I knew what I was getting myself into.”
Plain language and financial education go hand-in-hand. Financial Literacy Month is a perfect time to learn more about saving, credit and debt, buying a car or home, paying student loan debt, and other aspects of financial wellness. Free information from the Federal Trade Commission website shares the importance of consumers’ rights, as well as how to file a complaint. But as plain language advocates would likely agree, efforts from within the private sector are just as – if not more – important. Plain language, when used to present easy-to-understand facts and risks, allows people to take back control of their own money and build more financially stable communities.
About the author: Beth Kotz is a contributing writer to Credit.com. She specializes in covering financial advice for female entrepreneurs, college students, and recent graduates. She earned a BA in Communications and Media from DePaul University in Chicago, Illinois, where she continues to live and work.