According to the Corporate Finance Institute, Financial literacy is the cognitive understanding of financial components and skills such as budgeting, investing, borrowing, taxation, and personal financial management. In simple terms, financial literacy is the ability to manage your money. When one does not possess the necessary skills and knowledge to successfully control their financial flow, this person is considered financially illiterate.
Studies show that nearly 50% of Americans are financially illiterate. This number is continually growing due to the current generation’s lack of financial education. When it comes to being responsible with monetary actions, it all starts in the youth! Young adults are not being shown the importance of having a simple, solid base of financial literacy. Unfortunate factors such as high-interest-rate loans and heightened debt are two difficulties that often catch young adults in rough situations.
Financial literacy begins with the decision to be critical about investments and overall spending. This is not an easy decision to make and abide by.
Humans often make decisions based on their current predicament and fail to look to the future. It is crucial to begin teaching the youth to stand firm in financial choices and find value in the monetary opportunities presented to them.
For example, young adults should appreciate their ability to hold credit cards and receive loans. If finances can be appropriately valued and maintained with intention, the financial literacy rate will surely go up!
In my opinion, there are far too many topics that schools do not touch on nearly adequately enough, and financial literacy is one of them. Suppose the education system implemented programs to relay the importance of valuing finances. In that case, I believe that young adults will come into the “real world” with a better sense of understanding, prepared for any financial situations they may face!
|Brylee Bergbower is a student at the University of Texas at Tyler studying Kinesiology who is taking on the world, learning about financial matters, and writing about it for Kelly Community. In her spare time Brylee juggles two part-time jobs, spends time with family and friends, stays fit, and studies!|