RefAnnBib #2

Part 1: Bibliographic Entry:

Zucchi, Kristina. “Why Financial Literacy Is so Important.” Investopedia, Investopedia, 17 Nov. 2021,
Part 2: Terminology/Keywords:
Credit Cards
A distorted perception of reality
Part 3: Précis:
This article that Kristina Zucchi wrote dives deep into the associated benefits that come with being financially literate. Many of us have undervalued the importance of having a thorough awareness of various financial topics, which can have a pernicious and damaging effect on us because many of us would carelessly use credit cards and take out loans without fully understanding the liabilities we are placing on ourselves.  Many individuals are unaware of the downsides and drawbacks of using a credit card. Many don’t even know how to invest appropriately. Investing in individual stocks is like putting all of your eggs in one basket; it is a tremendous financial risk. Lacking a robust understanding of this material can lead to years of poor financial decisions. Just to put this into perspective, the Financial Industry Regulatory Authority issues an exam every couple of years to see where Americans stand on different things such as bond prices, inflation, interest rates, the importance of diversification, and how compound interest can exponentially grow your money. Only 34% of us can answer four or more questions correctly. People need to realize that there is no emotional attachment with a credit card, but there is with money. Ironically, as statistics show, many of us are gradually shifting away from the conventional method of purchasing goods, which is by cash, and toward the use of credit. Credit cards are certainly and truly the worst financial tool ever given to the American consumer. It gives people a false sense of reality and time because they think they can swiftly amass a large sum of money, and it can often lead to instances of overextension where a person incurs more debt than they can handle. With debit cards, people will spend more than they can afford. The credit industry has done a great job of masking its true intentions. Many creditors paint themselves as helping individuals while, in reality, they are exploiting those who do are immature and don’t necessarily have the strongest understanding of how credit cards work. By giving us access to money that we need in the form of credit, it is easy to overspend and not think twice about our actions. People begin to believe in this fantasy that can reimburse the money quickly, but this is instantly dispelled when they finally acknowledge that credit cards just make it all too easy to accrue debt and get stuck in this inescapable and cyclical way of life. If you can’t afford something, don’t buy it! You feel enchained. Teens are now being inundated, bombarded, and flooded with opportunities to register for a credit card, knowing that many of them have little to no knowledge when it comes to this, which makes it easy for them to fall into financial trouble. Millennials have a lot of student loans and mortgage debt; 44% of them think they have too much debt. In addition, one-fourth of living Americans said they have no retirement savings. Only about four out of ten individuals who aren’t yet retired assume their retirement savings are on track. Nearly 60% of people with self-directed retirement savings confessed to having low confidence in their ability to make retirement decisions. Many people will mismanage their finances due to their lack of understanding of such an important matter.
Part 4: Reflection:
This article retains an excess and profusion of very pertinent information relating to why financial literacy is of the utmost importance. The data and statistics given in the article will undoubtedly bring credibility to my paper and proceed to support my argument that being financial literate is essential to unlocking a life free of financial liabilities. This article also made me have an epiphany and a striking realization that educational institutions should impose a course on personal finance onto their students to prevent them from being plagued with the ailment of not knowing how to properly prepare and plan for their retirement and for emergencies. It’ll give them a great sense of security and confidence since we live in a capitalist-driven market where the dollar controls everything. People shouldn’t have to rely on a stimulus check to save them from their troubles; they should already have an emergency fund covering 3 to 6 months of expenses. Now I’m debating whether I should argue for the inclusion of a personal finance course in all schools, as well as why institutions of higher learning should make it a requirement. Americans have insufficient household and retirement savings, as well as significant credit card and student loan debt, due to a complete lack of financial education.
Part 5: Quotables:
“Financial literacy is increasingly important as people manage their own retirement accounts, trade personal assets online, and carry student, medical, credit card, and mortgage debt.”
“Forty-three percent report using expensive alternative financial services, such as payday loans and pawnshops. More than half lack an emergency fund to cover three months’ expenses, and 37% are financially fragile (defined as unable or unlikely to be able to come up with $2,000 within a month in the event of an emergency).”

“Yet, in its “Report on the Economic Well-Being of U.S. Households in 2019,” the Board of Governors of the U.S. Federal Reserve System found that many Americans are unprepared for retirement.”

One thought on “RefAnnBib #2

  1. It’s nice to see how much you trust this article while stating your opinion on it; must mean that the article simply states facts, rather than have its own bias from the author. As for my opinion on this topic, I wouldn’t say that a financial course should be required for students to take, as there are plenty of other courses that students need to focus on first; having an extra course would add more stress into their life.

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