When the destabilizing Covid-19 pandemic and imminent recession are factored in, financial literacy becomes an especially helpful asset. In this article, we will explore the importance of financial literacy for teens, the state of financial education in America, as well as ways to gain money management skills.
Learning about financial literacy is key to developing a strong financial foundation. Unfortunately, most Americans don’t receive a formal financial education. Only fifteen states in America - including New Jersey - require a financial literacy course to graduate. That means that millions of American high school students graduate without the basic financial skills needed to support themselves independently. Many people get their financial knowledge from the environment around them, including parents, peers, and other adults. However, this hurts younger people because they may be exposed to flawed money management skills: Gen X, the current parental generation for teenagers, has the most non-mortgage debt out of anyone. Teens may then apply those flawed skills and spread them to others - creating a vicious cycle that passes through generations.
With the costs of living and education rising quickly, debt can amass for young people and constrain them financially for years to come. Loans are more easily available than ever, usually in the form of student loans or credit card debt. Most teenagers and college-aged people, however, don’t realize the difficulty debts can pose, causing them to spend more money than they can afford. Debt also borrows from future income, usually interfering with financial goals that people set for themselves. Additional fees from high-interest loans - which younger people may not watch for without a financial education - can make the debt outweigh any potential positives it was taken out for. Debt has been rising throughout the years, and will continue to do so without proper intervention for younger generations.
Considering the importance of a strong financial background, how can teens become better prepared for their financial futures? The best option is to take courses in school, such as economics, personal finance, or introductory business classes. However, not every school has those opportunities, and it is important for all students to have access to some form of financial education. Another opportunity for learning is contacting non-profit organizations nearby, such as Junior Achievement. This financial literacy and career readiness focused organization has 100 local offices, where students can attend finance workshops and participate in competitions to test their learning. Other options include online courses, listening to finance podcasts, and reading books about the topic.
In today’s developing world, financial literacy is an invaluable skill for all people, especially teenagers. It provides them with the necessary skills to go out into the world and become economically independent, successful individuals.
