Knowing how to use money wisely is one of the most important skills a person can learn. Whether or not someone understands financial literacy can greatly impact their future. Many people in America alone have outstanding credit card and student loan debt, keeping them in a perpetual cycle of loan payments, and possibly even creating more debt on top of that. This has been such a problem that nearly 53% of Americans feel stressed when thinking about their finances and 44% feel that discussing their finances is stressful. As important as it is, many schools do not require financial literacy classes and as a result, 27 states scored a C, D, or F for high school financial literacy.
Why Financial Literacy is Essential
Adults in the U.S have found it difficult to save and manage their money properly. For some, the problem often stems from a lack of understanding of financial concepts like savings, budgeting, credit, interest rates, etc. This has led to millions of people spending borrowed money (credit cards) or taking out loans without planning out how they will pay it back. It’s become such a problem that 2 out of 3 families don’t have any emergency savings, 78% of adults live paycheck to paycheck, and 3 in five adults do not maintain a monthly budget. Of course there are other external factors such as lack of affordable housing and good paying jobs that can result in this predicament. Although what would help tremendously for these people is if they were exposed to personal finance classes in their education.
By the numbers
- 53% of adults are financially anxious
- Three in five adults don’t keep a budget
- Four in five youths failed a financial literacy quiz
- 27 states scored a C, D, or F for high school financial literacy
- 54% of millennials are concerned about student loans
- Four in five adults experience barriers to homeownership
More and more schools are starting to see the benefits of teaching financial literacy. Though still rare, students who do have access to financial literacy education have seen massive benefits. The results of teaching financial literacy in classrooms has helped students improve their credit behavior, confidence, and overall healthier life. Some of the benefits of financial literacy courses include:
- Encourages students to have good saving habits.
- Learning about budgeting teaches responsibility and awareness. Budgeting allows for people to become conscious of their spending habits.
- Financial literacy allows for students to become financially independent at an earlier age. Students can start learning what it takes to be on their own instead of being dependent on their parents.
- Positive financial decisions can help students build a strong credit score. Having a strong credit score can impact a person’s entire life such as: applying for a credit card, renting an apartment, buying a car or home, and sometimes even getting a job.
For many schools the question arises on when is it appropriate to teach students financial literacy, and the answer to that is as early as possible. Kids become aware of money from a very young age. It typically starts with witnessing transactions, media exposure and the inevitable desire for stuff. And yet, young people are increasingly unable to manage their financial health effectively. If financial literacy is taught in schools it’s typically at the high school level, but financial literacy can be taught at any age! Financial education is just as important of a life skill as mathematics, reading, and geography, with the benefits of learning it being crucial. According to one research study, two out of three high school students who had taken a financial literacy course had already started earning an average of $3,000 a year.
What About Parents?
It is important for students and parents to have conversations about financial topics as this increases knowledge and exposure. The 2017 Rowe Price Survey saw that 69% of parents are reluctant to talk about finances with their children and 23% of children talked to their parents about finances on a regular basis. Financial literacy applies to students of all paths in life, whether they pursue higher education or not.
Financial literacy is imperative for all ages.It is something that can drastically change someone’s life and future. Sadly, many families in low income communities do not have the support or resources to become financially literate. It definitely can help if schools could find ways to incorporate it into their curriculum.There are also free workshops and programs offered that can help provide a foundation for financial literacy. Here at Pandemic Professors, we are constantly introducing new Financial Literacy workshops. Our next upcoming session is on June 9th geared towards Grades 6–8. Click here or visit tinyurl.com/panprof-finlit to sign up now and follow us on Instagram and Facebook @pandemicprofessors to learn about our future Financial Literacy programs to come!
Written By: Irfan Jeddy