Why Financial Literacy is Important for Youth

Student Life

We hear it all the time on the news, documentaries, and of course, The Ramsey Show. In 2010, the same number of individuals who graduated from college filed for bankruptcy (Washington Post). A survey conducted by NASFAA in 2018 found that only 40-45% of college students, attending either two or four-year institutions, took a personal finance course.

Furthermore, many studies have found that even those with a doctorate can live paycheck-to-paycheck. With statistics higher than many people's bank account balances, it makes you wonder what the core of this problem is and how it can be combated for future generations.

It's simple really; the American school curriculum rarely prioritizes the actually important subjects, such as those that teach one to be more financially literate. Instead, many students find themselves annotating Romeo and Juliet like that's going to get them somewhere in life besides stuck in a toxic relationship. If you disagree, we can argue all day, but at the end of it all, the statistics speak louder than anyone can.

When a country's overall student loan debt exceeds 1.7 TRILLION, you know that there's an issue. When two in three families lack an emergency fund, you know there's an issue. When 78% of adults live paycheck-to-paycheck, you know there's an issue.

So, What is 'Financial Literacy'?

Financial literacy is simply the ability to manage one's finances effectively not only for everyday living, but also in order to accomplish long-term financial goals. Becoming financially literate equips an individual with knowledge and skills that allow them to strategically manage, save, and invest their money.

As a wise man once said: "it's not your salary that makes you rich, it's your spending habits." Way too many times do we see a hotshot lawyer with loans stacked up as tall as his mansion who at the end of it all, has the same net worth as someone who works in Ross and lives in a small apartment. Except, the latter's probably way less stressed out than the lawyer and didn't even have to go through the pain of getting a degree.

How Can Schools Involve These Courses in Their Curriculum?

Easy! Add a finance course to the high school list of credits needed to graduate. For instance, many schools offer the Dollars and Sense course that is perfect to teach basic financial literacy. It goes into depth about taxes, insurance, budgeting, types of banking, loans, stocks, real estate/commercial, etc. However, it's not mandatory to take and the class description is pretty boring so many people choose not to take it.

For many high-schoolers, the only reference they get before just diving into the independence brought by college is economics class, and clearly, based on the stats, that isn't working out too well. Some may argue that having high-schoolers simply do internships, jobs, volunteer work, whatnot, teaches them financial skills naturally. Again, not working out too well is it?

As a current high-schooler, I can confidently say that most of my peers just splurge like nobody's business. And those people end up being the ones eating microwavable noodles everyday in college. Proof that being financially literate is necessary, especially for youth. You can't cry about being broke while carrying a Birkin.

If you're smart with your money, you won't ever be broke.

It Goes Beyond School

Schools may take a while to get their priorities straight, so in the meantime, parents or legal guardians should take the initiative and teach their kids about basic financial literacy. It can start by discussing their own jobs and how the overall gross to net system works. After giving their child an idea of the basis around finance, they could start going more and depth about their own loans and how they manage to...well, manage everything.

If you don't get taught by your parents, there is literally no excuse living in a time when the internet exists. YouTube has many short videos that make the seemingly boring subject of money management more interesting with animations and interesting choice of jokes. If you're not into videos and would much rather just read, there are many articles online, such as the ones posted on Forbes, that discuss everything you need to know.

At the End

However, despite it all, youth isn't going to learn how to be financially literate from biased people in the finance industry who are making videos and articles to feed off of people's illiteracy, Youth will learn if it's taught and prioritized from an early age, specifically at school or at home.

Money can't buy you happiness, sure, but debt, high interest rates, risk of bankruptcy, etc definitely won't lead you to happiness either. Financial security is important and accepting that from a young age really benefits you for the rest of your life.

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Sania Ahmad

Sania Ahmad is a sixteen-year-old social entrepreneur and mental health advocate from Texas. Besides advocating and entrepreneurship, she also believes in creative expression and hopes to put that into perspective via her articles! Lastly, she enjoys cats, anime, and reading psychological thrillers.