Studying how people of different ages demonstrate their financial literacy is a fascinating exercise, one made only more interesting by the coming-of-age of Millennials.
Studies suggest that even with greater financial burdens from economic uncertainty and student loans, they are still lagging behind in basic financial education. Modern life has brought new challenges, and Millennials are feeling some of those challenges more keenly than others. There now appears to be a significant gulf between real financial literacy and financial confidence. Millennials don’t really want for confidence, on average, but a surprising number of them do lack a basic understanding of finance.
And while there are examples of some schools and universities now folding financial literacy into their curriculum, it clearly isn’t enough. A recent survey found that 87% of all Americans believe that financial literacy should be taught in school. And that sentiment is echoed in the feelings of Millennials themselves. The same survey showed that 60% of young people feel that a financial literacy test should be a requirement for high school graduation.
The problem may be that in the minds of the students, there is no clear and applicable use for an education in fiduciary skills. Why should they learn about balancing a checkbook when they don’t even have a checking account yet? It’s the equivalent of those who have no interest in becoming a quantity surveyor. Why would they have any need for learning about advanced calculus and parabolas?
So while budgeting, debt, savings, and other personal financial basics may be essential tools to a grown adult in the workaday world, these subjects are unlikely to motivate the interest of a high school student who still relies on his/her parents to make these household decisions for them.
Perhaps a “financial driving test” should be implemented before any student loans are approved. This might sound like a crazy idea but think of the consequences. If a student is not able to pass a basic personal financial test, then they won’t be approved for a student loan. How much money might be saved? How many educated or semi-educated students would be the result? It may not be such a crazy an idea after all.
And it would force parents, students, and teachers alike to engage in the subject in a far more meaningful way, with real-life application staring them in the face.
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