The Bad News
The Jumpstart Coalition for Personal Financial Literacy determined that the average student who graduates from high school lacks basic skills in the management of personal financial affairs. Many of these graduates are not capable of balancing their checkbook and lack survival skills associated with earning, spending, saving and investing.
Many young people fail in the management of their first consumer credit experience caused by bad financial management habits, and struggle through their lives learning by trial and error. A survey of individuals who filed for bankruptcy in 1997 found that 8.7% of all filings were among young adults ages 18-25.
Parents and mentors can help prevent this from happening by allowing children to make mistakes in a no pressure area, before they go out in the real world. With education, guidance and support from a caring adult, they are bound to have a head start. Kids who develop good skills managing money will be more apt to handle the pressures of adulthood much easier. Kids whose parents do not talk with them about financial issues will have at least 20% less financial literacy knowledge. There are plenty of compelling reasons to get started right away.
Additional Statistics on children’s money management history:
- Only 21% of students have taken a personal finance class in school (AESC).
- 50% of students claim that they get financial information from their friends (AESC).
- 50% of students claim that they have received no financial information (Kid$ense).
- College Student are bombarded with nearly 20 credit card applications per semester (CNN).
- 44% of Americans with pre-teens said they didn’t give regular allowances (Lutheran Brotherhood poll).