Most people think of financial struggles as something you experience mid-life. You have a home, a family, a job that pays a decent wage, and something unexpected comes along and turns your world upside down. You might lose your job or experience a medical problem or lose your spouse – all things that can happen at any point in life, but that most often occur and cause the greatest impact during mid-life. You’re at the height of your earning potential and the height of your lifetime responsibilities.
Despite many financial struggles occurring in mid-life, it is often earlier in life when these problems begin. The choices young adults make can prepare them for a lifetime of financial misery or the give them the ability to recover quickly when financial emergencies occur. As the Millennial generation joins the workforce, and therefore the spending, saving, and investing force, it is becoming more and more obvious that financial knowledge is lacking across the board.
Financial Education Lacking
A survey conducted by Jumpstart Coalition for Personal Financial Literacy that looked at high school students from 1997 to 2008 found the average score on a financial literacy exam dropped by 10% to just 48.3% – the lowest average score ever.
With the news that less than half of graduating students had basic financial knowledge, researchers concluded that schools aren’t doing nearly enough to give young people the start they need to succeed financially. Only 13 states require economics classes to graduate and only 16 test on economic issues. These numbers have decreased over the last couple of decades and researchers believe the effort to teach students about finances will continue to wane.
Some students are learning financial skills at home, but this is not always the case. Parents might assume schools are teaching these essential life skills or they might lack financial savvy themselves. Young adults are entering the world armed with very little financial defense, setting them up for failure down the road.
In addition to a lack of financial knowledge, student are taking on a great deal of debt early in adulthood, mainly in the form of student loans. They might also sign up for a credit card – or several – while on campus away from home. What might not seem like a big deal at 18 becomes a huge deal at 25 or 30, when bills are coming every month and thoughts of marrying, buying a home, or saving for a child’s tuition become top priority.
Where to Go from Here
Ideally, schools will begin to take financial education seriously and parents will make up the difference. A crisis looms, if it is not already in full swing, and unless those graduating into adulthood don’t get their financial issues under control, the long-term effects on the economy will be significant.
Individually, young adults should take responsibility for their finances. If they did not have classes or learn what they needed to know along the way, now is the time. Too many young adults are learning trial by error, which gets them to where they need to go, but leaves them with decades of debt.
If you believe you are struggling financially or you want advice on how to avoid future financial struggles, we can help. Sometimes financial issues are overwhelming. If you need somewhere to turn, contact the Law Offices of Robert M. Geller at 813.254.5696 to discuss your financial situation.