Financial literacy skills are critical parts of your growth as an adult and key ingredients for success both in your career and life overall. The COVID-19 pandemic showed a declining financial literacy in the general population of the United States. Younger Americans are falling behind and they need to be given the tools to be financially secure later in life. If they don’t get the education they need to understand how their finances actually work, the next generations are going to be in serious trouble. They won’t be able to budget or plan correctly and they may get themselves into spiraling debt they can’t get out of.
The 2020 Economic and Personal Finance Education in our nation's schools biennial Survey of the States, which serves as an important benchmark for the progress of educational development in the area of finances, found that five states still don’t include any personal financial education in their curriculum. Less than 17 percent of high schoolers were required to take at least one semester of a personal finance course. Even more telling is the fact that the same survey found that six states got rid of economics and personal finance requirements to graduate.
Those decisions have future ramifications. Once these younger Americans leave school they have to enter the workforce and start earning money. If they don’t know how to budget correctly and save accordingly they will soon find themselves struggling. Millennials are a perfect example of this.
It isn’t just the American youth that are being left behind when it comes to learning and understanding their finances — adults are struggling as well. William Campbell Senior Vice President at David Lerner Associates said, “Financial Literacy is essential if you are going to understand your money and hope to plan effectively for the future. Educating yourself is the first step to successful financial planning.”
The National Endowment for Financial Education said that just 24 percent of Millennials demonstrate basic financial literacy. Not understanding your money and how to control it can result in losing cash, and in the worst case getting into financial trouble. The average American loses $1,634 due to a lack of financial literacy. The National Financial Educators Council estimates that adult Americans lost $415 billion in 2020 due to a lack of financial literacy.
Getting financially secure takes time and effort but it also takes education. Teaching future generations about money means they will be far more secure when the time comes for them to take their place in society.
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