The COVID-19 pandemic taught us many things, the importance of spending time with family, the impact of positive community support, the value in self-care, and the importance of having a solid budgeting and savings plan.
The pandemic also illuminated the need for greater financial literacy in many communities. Low financial literacy threatens the well-being of individuals and families, especially in underserved and low-income communities. According to the Fed’s 2022 Economic Well-Being of U.S. Households survey 37% of Americans lack enough money to cover a $400 emergency expense.
Evident is the need to mandate the inclusion of financial literacy and empowerment into the educational curriculum beginning at the elementary school level. When young people lack the financial knowledge, they need to make informed decisions, they are more likely to become trapped in cycles of poverty and debt. Children must learn the value of saving. Differentiating needs versus wants, as it relates to budgeting, is also essential to solid money management. Learning to maintain healthy finances should begin with their grade school allowances.
Every child should be required, or at least encouraged, to open a savings account and then taught the fundamentals of saving and budgeting during their primary years. As they approach middle school, children should study strategic investment practices and begin to position their funds for future growth. The high school focus could then shift to understanding the importance of managing credit, thus avoiding the devastation that occurs when credit cards are sent to their college dorms, despite their lack of income.
A 2021 survey done by collegefinance.com found that college students averaged more than $3,280 in credit card debt another survey showed that only 20% of college students reported having excellent money management skills.
Many of our children will earn the degrees and other highly regarded credentials but be labeled unemployable because of failing credit scores. It is imperative that we focus on financial education and empowerment beginning with our youth. All school systems must incorporate a comprehensive financial literacy program into the standard curriculum. Subjects must include Banking, Saving and Investing, Budgeting, Credit, Future Planning, Identity Theft, and Homeownership.
We must ensure that when faced with future economic stresses, our children will be unaffected by the conditions that are rampant today, assured that their core values will generate better financial decisions. By instilling a solid understanding of financial management, a large population of our youth will realize homeownership and investment rewards at much earlier ages than their parents. They will possess the knowledge and skills to manage their household finances, despite external economic conditions. Knowledge is power. Now is the time to empower our children with the information required to sustain a bright and secure tomorrow.
