Financial Literacy for Young Adults
National Financial Literacy Month is recognized in the United States in April as an effort to highlight the importance of financial literacy and teach Americans how to establish and maintain healthy financial habits.
In 2000, it began as Youth Financial Literacy Day, and in 2003, the United States Senate designated April as Financial Literacy for Youth Month. The following year the Senate passed a Resolution that officially recognized April as National Financial Literacy Month.
Many promotional events are held during the month, creating educational materials that center around effectively handling money and dealing with debt.
There is a need for financial literacy for American youth now more than ever. Only 20 states currently mandate that high school students take economics — two fewer than in 2014. This trend is disturbing, considering the fact that less than 30% of young adults achieve a score above 70% on recent financial literacy tests, and the average score was just 58%.
Yet from a historical perspective, some progress has been made. Forty-five states now include personal finance in their K–12 standards, up from 21 in 1998 (Alaska, California, Montana,
New Mexico, Wyoming, and the District of Columbia still do not).
Most high school level students don’t need to know about complex investments and high level financial concepts, but they most certainly need to know the basics, like how to open a bank account, how much they need to save each month to reach their goals and, if they borrow this amount of money, how much money they will need to earn to pay it back.
Immediate skills that have direct application to their lives are what is needed. It’s not very useful to teach a 16-year old about the complexity of mortgages, because the likelihood of their taking out a home loan in the next few years is very slim. So that knowledge, not having any direct application to their daily lives, will probably be forgotten soon after they take their exam on the subject. But they will need to know about how to live on a budget and balance their checkbook. That’s something that will be useful on an almost immediate basis. And developing healthy financial habits early is the key.
Bad money habits can have damaging, long-term consequences for our financial security. But developing healthy financial habits can do wonders for helping us achieve our long-term goals like saving enough for retirement or paying for a college education.
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