Preventing Third World America Step 3: Build Your Financial Literacy

In April 2010, President Obama issued a proclamation for National Financial Literacy Month. "While our government has a critical role to play in protecting consumers and promoting financial literacy," the proclamation read, "we are each responsible for understanding basic concepts: how to balance a checkbook, save for a child's education, steer clear of deceptive financial products and practices, plan for retirement, and avoid accumulating excessive debts."

On top of this practical caveat emptor advice, perhaps the proclamation should have added "And remember: The people you think of as 'service providers' are actually out to get you. They may appear friendly, but they're not your friends. They're hoping to hook you and your family into a vicious cycle of debt. This is financial combat. If you want you and your family to survive, you'd better learn how to spot the financial land mines buried in your mortgage and credit card contracts, and keep yourself out of harm's way."

Indeed, when it comes to getting ahead in America, the dice are loaded. But if we're ever going to change the rigged game, we first have to break that cycle of despair at the personal level. And the greatest antidote to despair is action.

Here are some tools you can use:

  • HelloWallet.com, a start-up company that, for a very small fee, acts as an online personal money manager, identifying savings opportunities for its users and alerting them to threats to their financial health before they become economic catastrophes. Launched in 2009 with a grant from the Rockefeller Foundation and touted by Bill Clinton, Ernst & Young, and dozens of nonprofits across the country, HelloWallet is giving America something that hasn't been available before: affordable financial guidance. Test yourself with HelloWallet's Financial Capability Quiz, and try out their helpful college-savings tool, located at the bottom of this page.
  • Mint.com, a free service that allows you to securely link all of your credit card, loan, bank, and retirement accounts for a great overview of your finances. The site also helps you to budget your spending with tools that easily divide your expenditures into a variety of categories, helps you plan the optimal repayment of your debts, and can send you alerts when accounts get low or when certain bills need to be paid.
  • kaChing, an open, transparent online investing community that provides investors with lower-than-usual account balances access to top-performing money managers
  • Kiplinger "Should you pay off debt or invest in savings?" Calculator
  • Kiplinger "How Much Can You Spend For Housing" Calculator