In today’s society, financial literacy is a very important factor in a person’s life. We are living in an age where social media and keeping up with the trend has a major impact on young adults. While scrolling through Instagram your friend from high school just posted photos of her all-inclusive trip to Cancun. Scroll a few more posts down and your cousin just posted a picture with the latest Gucci belt she bought last week. With making $10 an hour and having $25 in your account for food and gas for the week you still want that new Gucci belt and trip to Cancun. Your solution is to apply for a credit card. Two tuitions, four credit cards later, and you are in a deeper hole in debt than you had imagined. This is a prime example of why financial literacy should be a mandatory course in public schools.
There are very many types of finances such as managing a bank account to paying a home mortgage. Some of the most important steps to succeeding financially are budgeting, ability to track spending, paying off debt and planning for retirement. “Financial Literacy classes teach students the basics of money management, budgeting, saving, debt, investing and giving” (Ramsey). Dave Ramsey, a very well-known financial advisor and owner of a radio talk show explains that students who have knowledge on money management can provide a foundation to grow strong money habits early on in life. This can prevent many mistakes that can lead to lifelong struggles with money like such as large amounts of debt and bankruptcy.
In an article in Forbes magazine written by Dani Pascarella, explains that America has a major financial literacy problem. Overall, people want success when it comes to making financial decisions but according to Pascarella “Two-thirds of American adults can’t pass a basic financial literacy test” (Pascarella). Pascarella shows four alarming statistics and reasons why we need to pay more attention to financial education.
Some high school students do not know the proper way to write a check out of a checkbook or even manage one at that. This is an important tool to live a successful life financially. Most high school students attend college straight after graduation and students who cannot afford college tuition in full take on student loans. “According to a recent study of 2016 four-year public and private college graduates, these students left college with average student debt that ranged from a low of $20,000 in Utah to a high of $36,350 in New Hampshire” (Champlain College). Two semester tuitions, four maxed out credit cards, and a $500 monthly car payment later and stuck in debt deeper than anticipated. Basically Champlain College’s point is that we aren’t teaching students how to manage their money.
Many young adults do not understand most finances such as mortgages, debit and credit cards, and credit scores. The amount of financial decisions a person must make continues to increase. They like the idea of having, wanting, and spending money but do they really know how to earn, spend, save, and invest it? The biggest money mistake college students make is racking up credit card debt. Sure, credit cards are a convenient way to pay for things but what are hidden behind the convenience is high interest rates and future late payments that young adults aren’t aware of. As they continue to swipe credit on eating out, buying new clothes or partying they don’t realize the struggle they’re causing their future financially.
