Too many young people are financially illiterate
01/31/2009 12:49 AM
01/31/2009 12:58 AM
The issue of financial illiteracy has become a stark reality during our nation's recent financial crisis. As consumer spending is outpacing after-tax earnings and many carry overwhelming amounts of unmanageable debt, we must renew our focus on financial literacy for us and generations to come.
Research indicates that only 43 percent of parents have discussed the importance of prioritizing "needs versus wants" with their kids about spending money. Even worse, 42 percent of parents have not taken any steps whatsoever to teach their children about any financial basics (according to Capital One's 2006 Back to School Survey). Think about it, when did you first learn about compound interest? Did you understand mortgage rates and the different types of loans that were available before you bought your first house? Even today, are you comfortable with understanding the difference between investing and saving? If most of us are not clear about these basic financial principals, how can we effectively pass this knowledge down to the next generation? We can, and must, teach the next generation to have a better perspective on our personal financial frameworks.
According to the U.S. Financial Literacy and Education Commission, being financially literate will give one a better chance to be self-supporting and better prepared for financial setbacks and emergencies. Increased financial literacy also will give one a better chance to improve their standard of living through wise spending, saving, planning and investing. One will also be less susceptible to scams and identity theft. Financially literate citizens contribute positively to the local and national economy, thus improving peace of mind and national stability.
Many parents assume -- incorrectly -- that their children learn money management skills as part of their school's curriculum. The fact is fewer than half of U.S. states require even a basic economics course, much less personal financial literacy education. In South Carolina, however, financial literacy education is a requirement. However, additional funding and curriculum is generally not provided by the local school districts. This means it is even more critical for local schools to work with their business partners and other outside organizations to provide relevant financial literacy education programs for our students.
How can young people get this financial knowledge that they so desperately need? Fortunately, there are organizations such as Junior Achievement answering the call to educate the next generation. Our local chapter, Junior Achievement of York County, works closely with local businesses and school districts. The JA volunteers are local business leaders that deliver programs to teach K-12 students age-appropriate, hands-on lessons about how to become more financially literate.
The mission of Junior Achievement is to teach students to possess the necessary practical financial skills to grow up and run our nation's businesses, government entities and educational institutions effectively. Hopefully, they will demonstrate sound fiscal discipline in both their personal and professional lives, resulting in more robust communities and a stronger American economy.
How can you be involved? Contact our local regional director, Ann Elliott at 803-980-6363 or www.jaofyorkcounty.org to discuss various opportunities to donate your time and treasures. Junior Achievement of York County is supported solely by the generous donations of individuals and business both directly and though our annual Bowl-a-thon fundraiser in February. This school year, the cost to teach each class is $338 with the goal of completing 140 classes.
An investment now in teaching America's youth how to earn, save and budget, how to manage credit, and how to control their personal finances, will pay dividends in the long term.
The turmoil in our financial markets clearly demonstrates the need to take decisive action today. I encourage businesses and individuals to join organizations such as Junior Achievement. Share your time, treasures, knowledge and experience with our children and help improve financial literacy. It is a sound and timely investment in our children's futures and the future of our nation.
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