Of the questions students seem to ask on a typical basis, few are as bothersome as the question of “when will I use this in my life?” Although some subject matters are imperative for students to learn, such as their multiplication tables, not all learning will be used as they enter the workforce, such as taking the derivative of a complex function. However, there is one class that is often overlooked among school districts that would help a multitude of students: personal finance.
While most teens believe that they know just about everything, the majority have no idea how to manage their finances. According to a 2016 ING Direct poll, an astounding plurality of adolescent teenagers, eighty-seven percent to be precise, confess they have extremely little knowledge regarding money. Moreover, according to the report, thirty-five percent of respondents want to learn money-saving skills, and twenty-eight percent realize the significance of budgeting.
When looking at college-age students, the numbers are likewise bleak. According to a 2019 AIG Retirement Services report, approximately six out of every ten students have either taken or plan to take out loans to finance their tuition expenditures. However, just sixty-five percent intend to repay their debts on schedule and in whole. Furthermore, thirty-six percent of those polled reported having unpaid credit card debt exceeding $1,000. Several students also lack the financial means to pay off their debts and were unaware of the ramifications of not paying their invoices.
These findings supersede the classroom. Roughly one-quarter of all individuals in the United States claim their family did not offer them any financial knowledge when they were younger. Additionally, among those whose families discussed money management, the topics discussed differed greatly. Though sixty-five percent received advice on saving, just forty-five percent received advice on spending, thirty-eight percent received advice on donating, and twenty-five percent received advice on debt. Perhaps the most notable of these was that only twenty-two percent of individuals claimed that their parents taught them how to invest.
Unsurprisingly, such financial illiteracy in younger generations has already shown ramifications. Within the millennial subpopulation, they seem to have some strong short-term financial practices, but few think about long-term economic stability. This fact is seen as only half pay their credit card in full each month. Moreover, less than half have a retirement account, yet over half have a student loan. Yet, only thirty-two percent of individuals who took out a loan have paid them back completely.
Generation Z grew up with the 2008 Financial Crisis, and with this has come a longing for financial security. Moreover, according to the University of Michigan’s annual adolescent poll, the eldest of the Generation Z conglomerate are often more inclined to make employment a vital aspect of their life and are more likely to work overtime compared to most millennials.
However, like every generation, Generation Z has its flaws. Specifically, they are quite shy and fearful of assuming control. Notably, barely half of Generation Z have a credit card, and their usage rate is only thirty-one percent thereafter. Notwithstanding the small average usage, the demographic averages $1,963 in credit card debt. Thus, with half of Generation Z not building their credit score, others seem to have trouble maintaining a modest statement.
Currently, the outlook among younger generations and their financial wellbeing looks rather bleak in the long run. Thus, it must be asked what could be done to prevent future generations from suffering from financial illiteracy when coming into the workforce. Along with the decay of the nuclear family, finance has become a culturally prohibited item of discussion among parents and children. Nevertheless, schools also have incentives for creating a financially independent populace as students will become financiers of the classroom later in life, be it in the form of taxes for public schools or their children’s private school tuition.
Although such a proposition may make conservatives shriek as it seemingly entails giving power to school boards, personal finance classes could be a viable solution as they are required in twenty-one states currently, most of these being Republican-controlled states. Additionally, five more states require some type of personal finance education, although they allow it to be incorporated into other courses. In states that mandate personal finance coursework, statistics show that high school students make better financial judgments. This includes things like how to pay for continuing education, managing finances, repaying loans, avoiding payday lenders, and managing credit cards.
Although money is an evident part of life, it seems to be a subject with extremely negative connotations in modern society. Yet, if future generations are to be financially literate, change needs to occur, not just at home, but also at schools. By means of incorporating financial literacy into classes, students will join the workforce as good stewards of their wages.