The last two years have been full of panic. From subprime woes to the banking bailout, foreclosures and falling housing prices to layoffs and plunging markets, the recession has had everyone on edge.
Recently, it's true that things have been looking up. The Dow hit 10,000 again. Economic activity has stabilized, and the Fed is "cautiously positive" about future economic growth. Heck, even a Detroit automaker posted a profit. It seems we're moving from panic to reflection as experts everywhere debate how to clean up the crisis.
But it's possible that the best way to ensure this mess never happens again is something very simple:
Education.
Getting smart about money
During her presidential campaign bid last year, Sen. Hillary Clinton (D-N.Y.) talked to The Washington Post's Michelle Singletary about her proposed economic stimulus package, saying:
A lot of people are in over their heads in debt, and it's not just mortgage debt. It's credit card debt. It's consumer debt of all kinds. It's college loan debt. It's medical debt. And what we've got to do is provide as much help as possible to give people a chance to work their way out and get their finances in order short of having to go into bankruptcy.
Back then, Clinton proposed to create an "emergency support fund" that would, among other things, help pay for financial counseling for troubled households.
Singletary added, "Financial counseling can do more for households and communities than any tax plan," and she was absolutely right. The right financial counseling will do more than just bail people out in the short term. Done properly, it will teach people to build wealth over the long haul. And that will go much farther than any check from the government.
Here at the Fool, we've turned our attention to financial literacy via our philanthropic initiative, Foolanthropy. As Clinton pointed out in the Post article, schools once taught home economics as a matter of course; students learned to balance checkbooks, create budgets, and control the money coming in and out of their lives. Nowadays, too few people know even these basic skills.
The current crisis in the economy is a powerful reminder of the troubles to which financial illiteracy can contribute. It's also a wonderful chance to change this pattern.
In the past, Foolanthropy has focused on collecting community donations. This year, our approach is a little different: We're focusing on giving our time. We're partnering with a Washington, D.C., charter school, Thurgood Marshall Academy, where throughout the year we'll be involved in various volunteer opportunities, as well as organizing financial literacy workshops for students and parents.
We encourage you to embrace this Foolish spirit of volunteerism in your own community. Especially in challenging economic times like these, there are doubtless many worthy causes that could benefit from your time and attention. And there's still a way for you to partner with us -- for every article comment on Fool.com during the campaign (Nov. 25 through Jan. 8), we'll donate $0.10 to Thurgood Marshall Academy (up to $20,000).
So please, use this opportunity to discuss the importance of financial literacy, and the ways you're giving back to your own community. We'd love to hear what you have to say.
A previous version of this article was published Jan. 24, 2008. It has been updated.
Ellen Bowman's finances are better when she stays away from the iTunes store. Ellen does not own shares of any company mentioned. The Fool has a disclosure policy.
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