If not you, then who? If not now, then when? – The Growing Problem of Youth Financial Education

One in Six.  One in six students throughout the U.S. do not reach the baseline of proficiency in financial literacy.[1]  Think about that?  These students eventually become the next generation of citizens and workers in our great country.  And on top of that, when these students are asked to define success in adulthood, the top answer is Financial Independence. [2] So how do we address this problem of better preparing our children for adulthood?  Where should the financial education and curriculum come from – should it come from the school or in the home, or a combination of the two?  Let’s take some time to dig into this question a little more.

Financial education has dropped drastically within the past 50 years.  Only a mere 24% of Millennials (ages 18 to 34) surveyed could answer four out of five questions correctly in a financial literacy quiz.  By comparison, 48% of Baby Boomers (born between 1946 and 1962) were able to answer four out of five of these quiz questions correctly.[3]  While Boomers should be more knowledgeable, our young citizens are dangerously illiterate in this area.  When compared internationally, the US ranked behind China, the Czech Republic, Poland and Latvia, and was statistically tied with Russia.[4]  These drastic declines are due in part to the lack of financial instruction in school.  There are 4 primary obstacles in school that hinder students’ opportunities to become well educated on personal finance.  Teachers lack appropriate curriculum, qualifications, take-home materials, and they feel that financial education isn’t seen as a critical skill for college and career readiness. Additionally, many teachers do not feel comfortable teaching financial education.  Only 31% feel “completely comfortable”; 51% feel “moderately comfortable” and 18% feel “not comfortable at all.[5]  U.S. Schools are moving away from teaching finance, because generally administrators feel that instruction comes from home. 

One of the major issues with financial literacy is the fact that parents are unsure of when and how to talk to their kids about it.  A Charles Schwab survey indicated that parents are nearly as uncomfortable talking to their children about money as they are discussing sex.[6]  Although it may be an awkward topic to talk about, it is one that can be very beneficial to kids.  84% of teens report turning to their parents in order for advice on how to manage money.  However, 34% of parents say their family’s approach to financial matters is to not discuss finances with their children and to “let kids be kids.”[7]  So, you can see the conundrum here, right?  Teachers are not completely comfortable with the material and believe financial education should start in the home.  Students generally believe their parents or guardians provide the guidance for financial education and decision-making skills.  And ultimately, so many parents have a cavalier attitude about addressing financial literacy with their children.  So, we go back to our title of the article, if not you, then who?

 By the age of 5, children are hit with over 30,000 advertisements, transforming your children into voracious consumers.  It is never too early to start discussing financial matters with your kids or grandkids.  In fact, kids who discuss financial matters at a young age with their parents are much more likely to save their money rather than spend it.  Whether you know it or not, your child looks to you as the main influence on money matters.  Think about how you plan on getting your kids through college?  Have you started saving yet? 9 in 10 American parents believe a college education is an important investment in their child’s future, yet fewer than half (48%) are saving for college.  Of those that are saving, 52% of parents wish they had started saving earlier.[8]  College expenses are through the roof and are only going to go up from here.  It’s never a bad time to start saving, and informing your kids to do the same.  Talking about money and financial behavior with your kids and grandkids is integral to the success of financial education.  And we believe that this discussion should start in the home.  But we also believe the parent should not be alone in this venture.

There’s no better time than now to start pushing the issue of educating our kids on financial literacy.  This is something that we feel strongly about here at Kathmere Capital.  It’s critical that your children are financially literate and are well prepared for life after high school.  We believe the conversation should start in the home, and continue to be reinforced throughout school.  Organizations like the Jump$tart Coalition conduct local educational workshops and events for teachers.  They continue to lobby federal, state and local government as well as local schools to promote youth financial literacy.  Ultimately, wealth management teams may have the resources to supplement financial education for clients and their children.  At Kathmere, we are committed to empowering families to raise financially aware kids, while providing curriculum and framework for our client’s children and grandchildren, so they are better prepared to face real world financial issues.  And it’s not just talk.  Understanding these facts and seeing the need, we are going to help solve the problem for those people who turn to us for advice.  In the coming months, we will launch Kathmere Academy for our client’s school age children and grandchildren through an online education portal.  We are very excited and please stay tuned for more information to come.

[1] Beck, Ted. “Financial Literacy Today and Tomorrow.” Jumpstart. National Endowment for Financial Education, 23 Apr. 2015. Web. June & July 2017. p. 11

[2] Plepler, Andrew. “Young Americans and Money.” Bank of America. Bank of America/USA Today, Fall 2016. Web. June & July 2017.

[3] “The Case for High School Financial Literacy.” The Case for High School Financial Literacy | Center for Financial Literacy. N.p., n.d. Web. June & July 2017.

[4] “The Case for High School Financial Literacy.” The Case for High School Financial Literacy | Center for Financial Literacy. N.p., n.d. Web. June & July 2017.

[5] “Making the Case for Financial Literacy.” Jumpstart. N.p., May 2016. Web. June & July 2017. p. 1

[6] “The Case for High School Financial Literacy.” The Case for High School Financial Literacy | Center for Financial Literacy. N.p., n.d. Web. June & July 2017.

[7] “Making the Case for Financial Literacy.” Jumpstart. N.p., May 2016. Web. June & July 2017. p. 9-10

[8] “Making the Case for Financial Literacy.” Jumpstart. N.p., May 2016. Web. June & July 2017. p. 6-8