Managing one’s finances has the ability to affect lives long into adulthood and yet, little is being done to prepare today’s youth to ensure they are financially literate.
Quoting 2018 data from the National Financial Capability Study (NFCS), CNBC reported that a majority of student debt holders did not try to estimate their monthly payments in advance, while about half of student debt holders are concerned about being able to pay off their loans.
The report added that 42 percent have been late with a payment at least once in the past year, up slightly from 37 percent in 2015.
The problem is not unique to the US, with students from other countries, including Australia, also reporting low financial literacy.
Starting them young
— Viv ☕️ (@ViviFriedgut) February 20, 2019
In the US, a bill being considered by West Virginia lawmakers would add financial literacy as a requirement for high school graduation, reported 13WOWK.
High school graduate Christian McCormick said he is thankful for the education he received but wishes he’d learned more about real-world financial literacy.
“I don’t know anything about how to do any of this stuff. And they are expecting me to do this and just go out into the open world and know what I am supposed to do. It is really difficult,” McCormick said to 13WOWK.
House Bill 2775 would require each high school student to complete a one-half credit course of study in personal finance as a requirement for high school graduation. If passed, the requirement would begin in the 2021/22 school year.
Meanwhile, the US Financial Literacy and Education Commission (FLEC) notes that a lack of financial education and financial literacy is common among the student population.
Among their recommendations in their report includes encouraging higher education institutes to engage students in financial literacy and education.
This includes requiring mandatory financial literacy courses, deploying well-trained peer educators, integrating financial literacy into the core curricula and communicating with students about financial topics more than the current requirement of entrance and exit counseling.
The right way forward?
While lawmakers are pushing for financial literacy courses at the high school level, an increasing number of universities are also doing the same by offering students resources on the topic.
For instance, Harvard offers a financial literacy guide to help students arm themselves with the right information. It includes tips on budgeting, in addition to information on credit, savings and investing and taxes, to name a few.
McGill University in Canada offers students a series of workshops on the topic, including budgeting, expense planning, managing debt and investing.