Why would Merge Fields not resolve on email templates?

Why would Merge Fields not resolve on email templates?

I am brand new to this but I'm tech savvy.

I created modified an existing template. I added a simple merge field from Contacts.First Name. I even used the # to select the field. It looks like the correct syntax was entered into the template.

I sent a test email to a few contacts....the merge field did no resolve....it had the field syntax.

What am I missing?

Thanks in advance.
Matt