If you are not going to teach your teenage child about money, how do you expect them to manage their own money when they become adults?
Financial education should be a continuous process, right from childhood to adulthood. Unfortunately, not even our learning institutions seem to recognize this fact. We tend to assume that people will somehow learn about money on their own. There needs to be a paradigm shift when it comes to financial literacy.
So why is financial literacy important for youth?
Well, the importance of financial literacy for our youth cannot be overemphasized. There’s nothing as dangerous as a financially illiterate youth. Someone who doesn’t have an idea on how to manage their finances can easily fall into various financial traps unknowingly.
It is generally difficult to fix bad decisions concerning finances – it can take several years to do so. Teaching young people about money at an early age will impart them with vital knowledge and skills that will assist them to make informed decisions when it comes to financial matters.
Let us look at some of the reasons as to why financial literacy is important for our young people:
1. It Empowers Them
You have heard people saying that information is power. The same thing applies to financial matters. The more information you have about finances, the better-equipped you will be. On the other hand, a lack of proper knowledge and information about money is dangerous for any young person.
Why do we go to school to learn about science, math, history and other subjects? The answer is to empower us in those respective areas. Similarly, education about money should be given the same priority as other disciplines. Young people need to be empowered about money and how it works.
2. Financial Illiteracy breeds ill-equipped adults
Statistics indicate that young people who never received proper education on finances end up as irresponsible adults, particularly on financial matters. They don’t know how to invest, they can’t save enough money to buy a home, and often have very poor credit scores.
These behaviors are contrary to those of adults who were taught about money management while they were young. Such people are able to make informed financial decisions in their adulthood simply because they had a strong financial foundation in their youth.
3. Lack of financial education makes it easy for youth to pick up bad financial habits
Often, young people involved in poor money habits such as gambling had no or poor backgrounds in financial literacy.
They can be easily influenced by others to engage in other poor financial habits. A person with a proper financial background won’t be easily lured to participate in activities such as gambling and Ponzi schemes.
4. Financial literacy helps to better prepare the youth for emergencies
Sometimes we are caught up in urgent situations that require large amounts of money. For a young person who is financially literate, it becomes a little easier to maneuver and come out of the situation compared to someone who is financially illiterate.
In other words, there are numerous reasons as to why financial literacy is important for our youth. They should constantly be taught about how to save, invest, budget and manage debts. Failure to do so can lead to a generation that’s not only irresponsible but also poor.
What are the benefits of financial literacy?
There are a lot of benefits we get from being financially literate. Let us take a look at some of them:
• It helps us understand the value of money. When we understand the value of money, we are able to handle our finances in a better way. We will be able to know the importance of budgeting, saving and avoid unnecessary expenditures.
• If you are financially literate, you will be able to cut your coat according to your cloth. That means you will only borrow that which you are able to repay.
• It empowers us on how to invest and create wealth. Being financially literate generally enlightens us in various ways through which we can invest our money and generate more wealth.
•It prevents us from making poor financial decisions. A financially literate person will not be easily lured into Ponzi schemes and gambling. This is because they understand the value of money and how difficult it is to earn it.
To sum it up, youth financial literacy is very important. A person’s youth is a critical stage in life. The mistakes that you make as a youth will have a great impact on your adult life.
If proper education on money is provided at this stage, then we are bound to have a financially responsible adult generation.