For too many people, personal financial maintenance is something it shouldn’t be: It’s scary.
According to a 2014 Consumer Financial Literacy Survey conducted by the National Foundation for Credit Counseling, just 40 percent of American adults said they kept track of their personal finances. Even more telling: nearly three in four adults admitted they could benefit from professional help when it comes to managing their finances.
This lack of preparation has led to a number of troubling facts, and a clear need for financial literacy education.
Short answer: Right now.
If you’re a parent, teach your children “the value of a dollar” at an early age. Give them a head start on responsible financial management the next time you’re at a ballgame or at the movies, for example, by giving your child a $20 bill and seeing how she attempts to spend it. On her first try, she might ask for eight large popcorns, a dozen hot dogs and the cashier’s uniform! But, over time, and with guidance, she’ll learn how to make the most of her funds.
Of course, the problem of financial literacy does not lie in the wide-eyed naiveté of popcorn-eating children. While student loan debt balances are consistently increasing across the country (U.S. student debt increased by $77 billion last year, according to Federal Reserve Bank of New York), the majority of high school and college students remain unprepared to properly manage their finances.
A 2012 study released by JumpStart, a national nonprofit committed to improving financial literacy among youths, reports nearly 70 percent of 962 first-year college students across the United States scored a “D” or an “F” on a standard financial literacy test. Sixty percent said they did not know how to create a budget; more than 30 percent said they don’t track their spending; and nearly 40 percent admitted finances were a “significant source of stress.”
That lack of preparation has led a large number of college graduates to delay buying new cars, new homes. It’s forced young adults to delay getting married and to think twice about when or if to have children.
The importance of financial literacy goes beyond the obvious benefits of financial freedom. While complete financial literacy isn’t achievable overnight, there are resources available online and in your community. All it takes is some effort, some planning and – of course – a commitment to yourself.