Do You Know What to Do With Your Money?

The richest nation in the world is facing a money crisis.

Too many Americans are insufficiently educated about money. All aspects of money -- credit, interest, savings, investing, taxes. You need look no further than the front page of the newspaper for evidence that over-their-head homebuyers didn't understand the exotic mortgages on which they're now defaulting.

Make a federal issue out of it
The problem is so dire, in fact, that Congress deemed April "Financial Literacy Month."

OK, so April also happens to be "National Soft Pretzel Month," and cynics may roll their eyes at an opportunistic Congress commemorating a serious problem with a meaningless designation.

But as the saying goes, any press is good press -- and making a national issue of financial illiteracy is in no way a bad thing. This is not a frivolous topic.

"A national priority"
Skeptical? Consider this story, published earlier this year in Business Wire: "The President's meeting with financial literacy leaders, held during National Financial Literacy Month, represents the first time in U.S. history that a sitting President has called a meeting on financial literacy as a national priority in and for America."

Fortunately, the task of financial literacy has moved from the politician's platform to the philanthropic arms of large corporations, which have taken note and devoted significant resources (read: money) to tackle the problem. Companies supporting financial literacy are as diverse as payday lender Advance America (NYSE: AEA), computer titan Dell (Nasdaq: DELL), multinational banks JPMorgan Chase (NYSE: JPM), Deutsche Bank (NYSE: DB), and discount broker E*Trade (Nasdaq: ETFC).

Or is it hype?
Earlier I said financial illiteracy is a crisis. It is, but don't take my word for it.

Congressional legislation calling for April to be National Financial Literacy Month lists a dozen of the grimmest statistics about our nation's financial picture. Here are a few:

• The personal savings rate went from (0.5%) in 2005 to (1%) in 2006, the only negative years since the Great Depression.
• Household debt hit $12.8 trillion last year (a record).
• 1 million Americans filed for bankruptcy in 2006.
• 10 million U.S. households do not have accounts at mainstream banks or credit unions.

Preaching to the choir
Look, I'm aware of the irony of banging the drum about financial illiteracy on a website read by folks who are by all accounts very financially literate. Most readers likely answered with a resounding "yes" to the question raised in the headline. But I think there's something average folks like us -- savers, investors, students of money and the markets -- can do.

Very simply: Effect change in a group that has yet to do something foolish with their money. That group? America's youngsters.

If we can educate tomorrow's decision makers about personal finance and investing, maybe those grim stats will turn around.

As I see it, we have two options (which aren't mutually exclusive).

1. Talk to your kids, grandkids, nieces/nephews, cousins, siblings, or friends about personal finance. Tell them about credit cards, interest rates, rates of return on investments, high-yield savings accounts, index funds, 401(k)s, IRAs, credit reports, tax breaks ... whatever. Show them how it works. Tell them where to learn more. Buy them a book, even. Just get a dialogue going, keep it going, and spread the knowledge.
2. Donate your time or money to organizations that have made it their mission to eradicate financial illiteracy.

Toward the second goal, we here at The Motley Fool have made financial literacy the guiding principle behind our ongoing Foolanthropy efforts. And we need your help.

A personal priority
We have found, vetted, and endorsed five worthy charities dedicated to the cause. Our intention is to make financial illiteracy more than a month-long issue.

One of our Foolanthropy 2007 organizations, the Corporation for Enterprise Development, has developed programs that combine financial education with personal savings. In their own words, "Individual development accounts and 'SEED' accounts provide financial instruction while teaching kids the practical discipline of saving." CFED's hope, it says, is for young people to take control of their own lives and set their sights high.

It doesn't get more Americana than that: Controlling destinies and dreaming big.

You can help us make that happen by visiting our Foolanthropy page and reading more about CFED and the other four Fool-nominated charities. To learn more, to donate, or to tell us your thoughts on the matter, click here.