218 National Financial Literacy Month - Day 11 - The Current State of Youth Financial Literacy

First of all, the financial wherewithal of youth is very important because it is a forecast of future financial decisions and the results from them. Thousands of high school students were surveyed about their preparedness for the kind of financial decisions and tasks that adulthood requires. 

As students draw closer to their transition to adulthood, the survey reports consistently low levels of readiness to take on financial tasks from evaluating financial products to establishing and maintaining credit to understanding how to pay for college. These results are not surprising considering financial literacy is not mandatory in K-12 or college.

So exactly what are financial skills? Financial skills are knowing how to find, process, and take action based on the information and having confidence in one’s ability to reach financial goals. Skill and confidence play an important role in building financial well-being, the low levels of preparedness among young people could be a sign of trouble as students finish high school and move toward financial independence.

Understand that prior to taking part in financial education, less than a third of high school juniors and seniors reported that they felt prepared to compare financial institutions and select one that best meets their needs. Slightly more students but still less than half felt they could select, open, and manage a savings or checking account. 

Young people also reported low levels of confidence in their ability to establish financial habits that contribute to long-term financial well-being: budgeting and managing credit. Half of juniors and seniors said they were “prepared” or “very prepared” to set up and follow a budget, while just a third (32%) felt they could check their credit and maintain good credit over time.

 The skills of budgeting and managing credit are essential as young people move toward financial independence. The decisions they make in the next one to two years begin to carry consequences that can last much longer, directly impacting their lifetime financial well-being.

Other important aspects for youth include the ever-changing banking system which is more virtual than ever before, and  navigating the process of applying for college and financial aid for two-year and or four-year colleges. The bottom line is this, youth of today need to be financially literate, and the sooner they discover how to the better. I have confidence in our youth, they will find a way to become financial literate and when they do, we will have a stronger economy, and  country.