Teenagers today are enrolling in financial literacy courses at a rapidly growing rate – 31% more than last year, to be exact. But there’s a problem: many are still unprepared for their financial future.
A new study reports that while high schoolers are being introduced to concepts like budgeting, saving, and credit scores, they struggle to apply them in real life.
Learning about credit management, retirement savings, and understanding economic influences like inflation and interest is often the foundation of financial literacy curriculums. The topic has become increasingly popular among younger people, and it even has its own month (this month, to be exact).
More classes, less learning
Junior Achievement, an organization that teaches millions of students money skills each year, is a pioneer of financial literacy. But their recent survey suggests that despite being offered more personal finance classes, teens are not absorbing the essentials:
- Only 36% of teens say they put aside money for savings
- Nearly 70% of teens don’t plan on saving for retirement until “later in life”
- Eight in 10 teens have no idea what a FICO credit score is
A separate in-depth report by Annuity.org cites another scary fact: 75% of teens don’t feel confident about their financial know-how. In 2021, nearly 9 in 10 teens wanted to start investing, but nearly half didn’t pursue the idea because they were unsure how to do it.
The lack of knowledge is not for lack of want – the majority of teens say they wish they had “more personal finance education” in school.
Preparing for the (uncertain) future
This is alarming for soon-to-be adults, especially considering the current financial state of grown-ups.
Americans are still feeling the effects of inflation everywhere they shop. Newsweek just reported the headline “Americans are Dipping into Their Retirement Funds.” While 401(k) hardship withdrawals are up from last year, the article reports that millions of student loan borrowers’ credit scores are about to take a hit as the one-year “grace period” for repayment comes to an end.
Debt.com’s own survey of 1,000 Americans found more than 1 in 3 Americans are taking on credit card debt to make ends meet.
Financial literacy is all about mastering the language of money, and the country’s youth need to learn it now more than ever. Fortunately, the subject is becoming a priority.
Making money management a priority
Kentucky recently joined the growing number of states requiring high schoolers to take at least one financial literacy course before graduation. These classes usually focus on budgeting, saving, and investing for the future and developing business ownership skills.
As of now, Kentucky is the 27th state to have mandatory personal finance courses for teens. More states are expected to follow suit.
It’s a good start, but according to the JA study, it’s clear that schools have to keep improving how they deliver these financial lessons. After all, as a lot of high schoolers can vouch, just because they’re attending class doesn’t mean the material is sticking.
