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Youth Financial Literacy

Youth Financial Literacy. Preparing Today’s Youth for Tomorrow’s Financial Responsibility. What is Financial Literacy? . Basic personal financial management skills, including understanding of income, money management, saving, investing, spending and credit.

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Youth Financial Literacy

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  1. Youth Financial Literacy Preparing Today’s Youth for Tomorrow’s Financial Responsibility

  2. What is Financial Literacy? • Basic personal financial management skills, including understanding of income, money management, saving, investing, spending and credit. • The ability to make critical financial decisions. • Knowing how to manage money, use credit effectively, build wealth, and make good financial decisions.

  3. Why Is Financial Literacy Important? • Financial literacy among individuals results in more stable communities. • Improved financial literacy, particularly early in life, results in a higher standard of living over the long term, including retirement. • Gaining financial literacy is a long-term process that, for most people, requires the assistance of institutions outside the home.

  4. Why Is Youth Financial Literacy Important? • Research has shown that young people determine their attitude about handling money by the time they finish the 5th grade.

  5. Why Is Youth Financial Literacy Important? • Teenagers 13 to 18 are spending like adults, but are unaware of the possible consequences of their spending choices • About one-third of teens surveyed admits owing money to a person or company. • 14% are already more than $1,000 in the red. For teens 16 to 18, the percentage jumps to 22 percent. • Close to 50% say they are concerned about paying it back.

  6. Why Is Youth Financial Literacy Important? • It costs the average American family over $200,000 to raise a child to 18. • Only 32% of American parents talk to their children regularly about personal finance. • Only 7% of parents say their child understands financial matters well.

  7. Youth Cultural Competence • A system wide set of principles and practices that promotes an increased understanding and appreciation of youth involvement, youth popular culture, and positive peer influence; and utilizes these mechanisms to promote economic and educational achievement From “ Makin’ It” The Youth Development and Research Fund (Montgomery County, MD) Copyright 2005

  8. Tips for Educating Youth on Financial Literacy • Always be on the lookout for a "teachable moment." • ATM or in line at the grocery store, explain that the money you're getting or spending is money you earned. • There's no right way to teach all kids about money • Parents should feel free to invent the systems and games that work for them.

  9. Tips for Educating Youth on Financial Literacy • For younger kids, keep it simple. Young children learn best in a few short lessons. Do it over and over, and start when they're toddlers. • Explain the power of compound interest. Kids have something powerful on their side: time. The earlier they start to save, the more money they'll have later.

  10. Tips for Educating Youth on Financial Literacy • Give an allowance and tie it to chores around the house • Tell young people that they can have what they want but that they don't get it free. • Make it a fundamental rule that a portion of allowance always goes into savings. • Put spending money and saving money in different places. • Earmark a portion of savings for charity.

  11. Tips for Educating Youth on Financial Literacy • Talk about your finances with your children. And use play money to help explain • Help them start a business

  12. Resources • Jump$tart Coalition • www.jumpstart.org • Junior Achievement • www.ja.org • National Endowment for Financial Education • www.nefe.org

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