Understanding the Numeracy Definition and its Relation to Poverty

Along with basic reading and writing, one of the key abilities needed to overcome poverty is numeracy skills. The numeracy definition per Merriam-Webster is the “ability to understand and work with numbers.”¹ This doesn’t necessarily entail something as complex as algebra. Someone just needs to recognize numbers and be able to perform simple addition and subtraction. In contrast, the inability to do basic math is known as financial illiteracy.

The link between illiteracy and poverty has long been proven.² Now, organizations recognize that they must also include numeracy as a complementary skill to reading and writing. In 2017, a report by NEFE, a financial education organization, indicated that one in five U.S. teenage students did not have basic math skills.³ This number is staggering in a country where education is fairly ubiquitous. Worldwide, only one-third of adults understand simple math.⁴ South Asia as a region has the lowest financial literacy rates in the world.⁵

Factors that lead to this financial illiteracy include lack of access to education, generational poverty and gender inequality. Though there may be a school nearby, if a family is struggling just to survive, there will be no extra money for school fees or supplies. Often, children may be forced to work as young as possible in order to earn income and help the family survive. Girls, in particular, face child marriage and social disparity that commonly excludes them from education. These factors, which are often cyclical, keep children out of school and away from learning. Most likely, their parents can not read or write, let alone know basic math. If this cycle continues, the children and parents can easily become trapped by it.

In addition, illiterate people face money lending schemes.

“A major consequence to the lack of financial literacy in developing Southeast Asia is the rise in thriving loan sharks’ businesses. In Thailand, millions of the poorest and most illiterate become prey of unscrupulous and organized black market lenders who cash in up to 20 percent interest on a small loan—per month.”⁶

Families may see a loan as the way out of their financial dilemma but end up becoming indentured servants when they are unable to pay back the loan. If they had basic math and literacy skills, they could have understood what they agreed to. Instead, they tie their family’s fate to something they cannot understand.

Being able to avoid that fate, as well as even buy food at the market without being taken advantage of, are essential to breaking cycles of poverty that trap generations of people worldwide.