Retirement insights from a Colorado PERA perspective

Issues & Perspectives

Making Sense of Financial Literacy

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April 2021 is Financial Literacy Month. Now in its eighteenth year, the month has kept its focus on the original goal, as stated in the original 2004 Senate Resolution:

“to raise public awareness about the importance of financial education in the United States and the serious consequences associated with a lack of understanding about personal finances.”

President Biden has also proclaimed April to be National Financial Capability month, saying:

“High-quality financial education should build on and respond to people’s individual strengths, circumstances, and needs in order to help them work toward their own unique goals.”

What is “Financial Literacy”?

There is no single measure for financial literacy. Google “financial literacy quiz”, and you could spend an entire day taking tests.

For example, the National Financial Educators Council has created a half-dozen quizzes that ask general awareness questions on a wide array of topics (including standard and advanced versions).

About 59% of more than 60,000 test-takers passed the standard test referenced above, and the average score was 68%.

But what makes a particular personal finance topic relevant — paying off debt, owning a home, planning for retirement, and more — depends on the circumstances each person faces and the tools they have at their disposal. These, of course, can vary.

So, while quizzes like these are a fun way to gauge general awareness about financial topics, they aren’t the best measure of literacy on an individual basis. What, then, does it mean to be “literate?”

Bridging the Gap Between Knowledge and Action

Financial knowledge can equip a person to make more informed decisions. But without action, knowing about personal finance adds nothing to a person’s net worth. A person who saves 3% of their salary in a 401(k) but who isn’t confident they know how a 401(k) works is probably better off than a person who knows every detail about 401(k) accounts but who has no savings and has no plan to start.

In a sense, a person achieves literacy when they implement financial knowledge into their life in a tangible way. It’s similar to learning a language: Memorizing vocabulary words on flash cards is an important step in learning, but it takes more than a vocabulary to have a conversation or become fluent.

PERA offers members a variety of tools and resources to bolster financial literacy. One way to help understand what’s available is to think about each resource as either education-oriented or action-oriented. A few examples are shown below:

Education Action
PERA partners with employers by offering free workshops about how to make sense of investing. PERA members can enroll in a PERAPlus 401(k) with their employer or in PERAPlus 457 directly online. (more info here)
PERA offers webinars about planning for retirement. Refine your own individual retirement plan. Meet with a PERA representative if you have additional questions about your PERA benefit.

The Importance of a Plan

Financial literacy is important. While it takes more than simply memorizing financial principles to reap the rewards, having a baseline of knowledge is an invaluable part of becoming financially secure. Not surprisingly, a lack of financial knowledge is a common barrier to getting started. 

So in recognition of Financial Literacy Month, go ahead – take an online quiz. Test your knowledge against others. But when you’re done, go a step farther. Strive for true literacy. Keep learning, and find ways to apply what you know.


  1. Judith Falco says:

    I have a question. Does PERA check with health providers such as Kaiser Permanente, Delta Dental, VSP, UNUM, etc. to make sure their premiums are properly accountable for any increases in rates? I particularly noticed that among VSP, UNUM, etc., Delta Dental was the only provider that increased their rates this year and it was probably the least active of all medical providers during Covid-19 pandemic that I can think of. I personally waited what turned out to be 1 1/2 years for my 6 month checkup due to the virus, and I’m sure others put off their visits too – so why would the premium increase at all? They had to have saved millions.

    • PERA On The Issues says:

      Hi Judith,
      PERA reviews carrier performance on a quarterly and annual basis, and that information helps inform us of how frequently we need to do an RFP to review other carrier options.

      While it is true that there was a decrease in dental visits in Spring of 2020, when setting 2021 rates in Summer 2020 we were not sure if visits would stay low, go back up to normal, or even surge higher as COVID-19 restrictions evolved. In addition, there was an enhancement to the Delta Dental coverage for 2021 that makes preventive care no longer apply to the annual benefit maximum, meaning that enrollees can get their two 100% covered cleanings in the year and still have the full $1,500 annual benefit maximum left for any additional service they might need.

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