SmartBanking Blog

Importance of Youth Financial Literacy

                In honor of International Youth Day, we wanted to discuss the importance of youth financial literacy. In general, financial literacy can greatly improve one’s quality of life by fostering informed decision making and ensuring financial well-being. It is crucial that young people receive formal education on financial topics to ensure their future success.

                Before we can even discuss financial well-being, we must first discuss financial capability. Simply put, financial capability is on the road to financial well-being, and is the know-how necessary to avoid financial vulnerability and “build economic stability” (Youth.gov). Having financial capability includes things like avoiding predatory loans, understanding appropriate credit card usage, maintaining a good credit score, and understanding how life choices affect financial futures.

                While young people often learn about money through everyday observation, formal education from parents and teachers is also necessary. A round knowledge of the core principles of spending, earning, saving and investing, protecting, and borrowing is pivotal. Don’t worry, though; there are many resources available to youth, parents, and educators to help along this journey. Here are a few helpful resources:

• https://www.fdic.gov/resources/consumers/money-smart/teach-money-smart/money-smart-for-young-adults.html
• https://pueblo.gpo.gov/CFPBPubs/CFPBPubs.php?NavCode=K
• https://consumer.gov/
• https://www.mymoney.gov/

Also keep in mind that all young adults are different and have different goals. Some may be interested in a college education, which may require additional instruction on student loans, savings, and credit card usage. Others may want to enter the workforce after high school, meaning they will more quickly face other financial responsibilities.

It is important to remember that while adults may deem a subject important, young adults may not. A survey found that seventy percent of adults thought teens should learn how to complete and file a tax return, but only thirty-nine percent of teens expressed an interest in this topic (Youth.gov). We would recommend individualized conversations with young adults to find out their long-term goals and what sorts of topics interest them. Remember: don’t judge! This is a time of great change and lesson-learning, after all.

 Most teens want to learn about money in an easy way. This can include practical lessons, technology-based simulations, or informal education. It is important to reinforce that the ultimate goal is to achieve a sense of financial well-being which will allow them to “fully meet current and ongoing financial obligations, feel secure in their financial future, and [be] capable of making decisions that allow them to enjoy life” (Youth.gov).

No one is more invested in a young adult’s financial well-being than those that love and care for them. Therefore, it is important to start financial literacy lessons early and continue them consistently. We hope you will allow The Savings Bank to be a part of this journey and keep an eye out for more youth financial literacy posts on the SmartBanking Talk blog!

Sources:

https://youth.gov/youth-topics/financial-capability-literacy/facts

https://youth.gov/youth-topics/financial-capability-literacy