I am pleased that financial literacy education is becoming more popular at schools in grades K-12, colleges and universities. There are many aspects of financial education that prove valuable as children and teenagers grow up and find their way in the world. An early start to understanding money management, debt, credit scores and planning for the future is critical for lifelong fiscal management success. People who learn these tools early on will not only be better equipped in life, but will be armed with important knowledge that will stay with them as they conquer student loans, plan their career path, purchase a car, start a 401(k), open a Roth IRA, apply for a mortgage, raise a family, plan for retirement and then eventually retire.
According to a recent study by National Endowment for Financial Education® (NEFE®) in partnership with Right About Money, 74% of adults felt that young people benefit most from financial education in grades K-12. It is crucial to start financial education at home when children are young, and more than the age-old, “money doesn’t grow on trees speech.” It is imperative to raise financially responsible and knowledgeable children who grow up to be financially responsible adults that pay their bills on time, maintain good credit, stay out of debt, maintain a budget and start saving for retirement early in their career.
Although financial education is more prevalent than it was ten or twenty years ago, more states need to get on board with this rationalization. Currently, 22 states have a requirement that a high school financial education course must be offered and only seven states have standardized testing, according to Jump$tart Coalition for Personal Financial Literacy and the Council for Economic Education. For the full chart, please visit http://www.jumpstart.org/financial-education-requirements.html. Jump$tart also created 12 Principles to keep financial literacy a priority year-round for students in grades K-12. Some of the principles include Investing, Understanding Taxes, Holiday Shopping and Consumer Protection/ID Theft. See each principle and description here: http://www.jumpstart.org/12principles.html.
To educate more young people, communities, higher education facilities and parents need to do a better job at teaching and reinforcing financial education. Although employers are stepping up and creating more financial education programs, especially in terms of educating their employees about the value of benefits such as contributing to their 401(k) or taking part in a health care savings account, if an employee starts a position and has no idea what a 401(k) is, they are already behind the learning curve.
Knowledge starts at home with parents and other family members and then is reinforced and better educated through schools. I applaud the following schools that are making financial literacy and money management classes a priority and setting an example for the thousands of other schools across the US: University of Wisconsin-Madison, University of North Texas, The California Community College System with 114 schools, University of Arizona, Texas Tech, George Washington University, University of Illinois, Chatham University, Yale University, University of South Dakota, and University of Mississippi.
As the father of an adult son and teenage daughter, I know the challenge of raising financially responsible children. If you feel your teenager or adult child could benefit from a complimentary appointment with one of our experienced advisors, to discuss financial planning, retirement accounts or to gain an understanding of financial literacy, please call our office at 215-256-7845. We are always here to help.
“Your Journey. Our Passion.”
Sources and Further Reading:
5 Schools on the Road to Financial Literacy, IGrad News, May 11, 2017, http://schools.igrad.com/blog/5-schools-on-the-road-to-financial-literacy
Beck, Ted, “How to Help Colleges Teach Financial Literacy,” Wall Street Journal, August 6, 2017, https://blogs.wsj.com/experts/2017/08/06/how-to-help-colleges-teach-financial-literacy/?cx_navSource=cx_newsReel#cxrecs_s
Jump$tart Coalition, http://www.jumpstart.org/
Right About Money, www.rightaboutmoney.com
“Where Financial Education Has the Greatest Impact,” National Endowment for Financial Education, April 3, 2017, http://www.nefe.org/Press-Room/News/Where-Financial-Education-Has-the-Greatest-Impact