Part of being an adult is to develop and understand individual financial objectives and, for that reason, in recent times many academics have felt the need to push for the introduction of financial literacy into the school curriculum. However, this is not to say that this degree of exposure to financial education is enough. Past surveys, such as the 2001 Parents, Youth & Money Survey underwritten by the TIAA Institute, have found that while the majority of parents feel confident about their understanding of financial matters and think they do a good job of managing their money, their actions and behaviors contradict their self-assessment.
Likewise, they have found that most students turn to their parents for financial education and guidance. The conclusion that can be derived from these findings is that the example in financial behavior is often set by parents, who may not be so knowledgeable in financial matters, regardless of their knowledge or whatever exposure to formal financial education they might have had. The result, as exposed by the findings from those studies carried out by the Jumpstart Coalition for Personal Financial Literacy and the National Longitudinal Survey of Youth, is that today’s young people do not know enough about finance and economics, meaning they actually know very little about handling their own money.
These alone are good enough reasons to encourage parents to bring financial education to their homes. There are also more and more kind of pressures to take into account. On the one hand, in the US and abroad some difficult financial conditions brought on by recession and other fiscal challenges have made of the world’s economy an increasingly complicated environment to navigate around. With growing uncertainty, information is essential. On the other hand, the development of new technologies and business models and identities, such as the Entrepreneur, have increased the necessity for financial tools for different purposes, making it nearly impossible not having to recur to them.
Thus, what we can observe is that people are starting to face complex financial situations increasingly younger. It is no longer the case when we see children setting up a lemonade stand and managing a weekly budget of $5. Instead, the children of today are being constantly exposed to fast-changing, thousands upon thousands of phone and tablet applications and online content in general. This means that there are not only greater temptations than before, but that owning technology has become a must have, in order to access information and opportunities. Without this technology, they are prone to be left behind.
It is pretty much the same for today’s adults, so it is not difficult to predict that many of these children will grow into college students who will own at least one credit card. If they choose to do so, by the time of they graduate half of them will have four or more, with an average balance of over $3,000. And because the costs of education have grown while incomes and government aid have not kept up, it is likely that many of them will also have had to take on at least one student loan. Not all of them will make it out unscathed, as the number of people going bankrupt younger is growing.
To sum it up, young people have more debt in general, especially when compared to the same age group during past decades. Young people are set, mostly unknowingly, into a path riddled by financial traps from a very young age. This situation can turn into a chain of events from which it becomes difficult to break, because they lack the proper knowledge to handle all the debts they take on. Not bringing financial education to home is a very costly mistake, especially considering that it is not something so difficult to achieve, taking into account that there are many experiences from which a lesson may be learned.
Actually, it is not like you have to be an expert in finances to teach your children a sense of accomplishment by earning their own money from an early age, or the importance to wait and save up for something instead of taking on a debt. By making of personal responsibility a habit, it is more likely that your children grow up into young adults who will want to learn more about financial tools before taking the any important decision. Of course, there is no guarantee that your child will become good money manager if you do introduce them to financial matters, but the odds may improve if you do not just leave it up to teachers in the classroom.