Building Future Wealth: A Guide to Early Financial Literacy

Far too many teenagers graduate high school without a solid understanding of the basics of personal finance. In many cases, this is due to the lack of a financial education curriculum in their school.

The average score on the 2022 National Financial Educators Council Literacy Test was 63.5%.. As this is a test administered to teenagers, this means that the average teen taking the test missed 36.5% of the questions. This and similar findings on teen financial literacy tell us that we need to improve in this area as a society to promote improved financial literacy going forward.

What Are The Consequences of Low Rates of Financial Literacy?

A 2018 study by FINRA showed that without adequate financial education, many people struggle with the management of their finances once they reach adulthood. The study found:

  • 46% did not have enough savings to cover an emergency
  • 48% of those with student loan debt were concerned about their ability to pay off this debt
  • 51% were concerned about running out of money once they retire

As you can see, the lack of a solid education in finance can have dire consequences once these students reach adulthood, which does not bode well for our society as a whole.

Getting Started with Your Children

Perhaps the best place to start improving financial literacy in our children is at home. Studies have shown that many basic financial habits can be instilled in children as early as age seven. Strategies to teach these good financial habits can be as basic as parents setting up a savings account for their child and having them save money they receive from gifts or other sources to buy things they want.

Parents can also help to teach their children about personal finances by discussing these issues with them as they become age appropriate. Budgeting is a good example. Teach them that money is a finite commodity, and they need to budget what they spend in order to achieve their goals. This might be some sort of purchase or simply spending money to do things like go to the movies with their friends. This can be especially important as they reach their teenage years and begin to hold part-time jobs, or perhaps make money from cutting lawns or shoveling snow for neighbors.

Financial Literacy Programs Can Help

Learning about biology or algebra in school is important. What is probably more important is learning about the basics of personal finance. Schools need to teach financial literacy in order to be able to say they are producing well-rounded young adult graduates who are ready to enter society. As a parent, ask about what your local schools are doing in this area. If you feel it is not enough, be vocal with your school administrators to change this.

Other Programs

Beyond the schools, there are organizations around the country that offer programs to promote financial literacy among teens. One such example is Wisconsin-based Secure Futures. They are a nonprofit that brings financial education to teens in area high schools and community-based organizations throughout Wisconsin and in the Chicago area. They offer three main programs:

Money Sense is a program geared towards high school juniors and seniors that introduces them to basic financial literacy concepts and practices. This program can be taught in a classroom setting or can be taken independently by the students. The hope is that by introducing these teens to these issues as they are starting to work, apply for college loans, open saving accounts and apply for credit cards that they will learn financial best practices as they embark on their financial journey.

Money Path is a comprehensive web-based software tool geared to high school students that links academic, career planning and financial planning. This program can help launch these students on a course to achieve their career and financial goals,

Money Coach is a program offered by the organization to mentor teens from under-resourced local areas with the coaching and guidance they need to help them develop good money habits that can hopefully help them as they move into adulthood and throughout their adult lives.

These programs offered by Secure Futures are just examples of the types of programs that are needed to get our youth off and through school with a solid financial education. This financial education may be as or more important than anything they will learn in high school or in college. All the knowledge and earning power in the world is useless if you don’t know how to manage your money to achieve your lifestyle and financial goals.

Are you looking for a solid partner to help you achieve your financial goals? Be sure to reach out to your local Wedbush financial advisor for expert guidance.



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