The goal of the DoughMain Financial Literacy Foundation is to support young adults in gaining the knowledge and abilities needed to have a stable financial future and a lifetime of financial responsibility. Although it’s not always easy or one of the most interesting subjects to learn, personal finance management can have a profound impact on a young person’s life if they can grasp it and make financial plans for the future. Only 24 states mandate the offering of a personal finance course, despite the fact that the US has placed a strong emphasis on financial literacy education and that 45 states have developed standards for the subject. Our knowledge of finances is deteriorating. We think the following are strong arguments for why it is crucial that personal finance be taught in schools, based on our experiences.
1) The lack of “friction” in our spending and buying habits. The ease with which one can spend money and make purchases has increased due to technology. We rarely consider the effects of our purchases if we don’t handle it. In actuality, the majority of homes overspend their monthly income, which puts people and families in a position where they always have to catch up.
2) Rising student loan debt. From $260 billion in 2004 to over 1.7 trillion last year, student loan debt has skyrocketed. The typical student accrues school debt far into their 60s and takes on more than $35,397 in loans. Pupils who are aware of the choices they are making are more likely to stay out of expensive debt.
3) Prudent investment, saving, and financial activities are encouraged by personal financial literacy. The capacity to acquire, comprehend, and use effective financial decision-making techniques empowers young people to ask questions, make better decisions, and continue those habits into adulthood. Additionally, they are more likely to talk to their kids about personal finance and to share their financial decision-making processes.
4) Bankruptcies are being filed by young adults. Students begin making purchases earlier, have greater choices for paying off debt, generally have more debt overall, student loans are more expensive, and bankruptcy rates are down. Per the American Bankruptcy Institute, over 1,253,444 million Americans filed for bankruptcy in 2020. In bankruptcy situations, this is the group that is expanding the fastest.
5) Common misinterpretations can cause major financial problems in the future. Regarding personal finance management, there are a lot of myths. It’s critical to avoid following outmoded advice or haphazardly adhering to rules of thumb. Several experts actually contend that the widely accepted guideline to save six months’ worth of income in an emergency fund is outdated and instead recommends saving nine months.
6) Possessing a rudimentary understanding of personal finance helps prevent people from falling prey. People sometimes have to make financial decisions during stressful financial times because they are under pressure from creditors or because they lack confidence in their financial situation. Gaining knowledge of fundamental abilities enables people to avoid these predicaments, overcome obstacles, and get out from under financial injustice.
7) Provide choices for yourself. Knowing one’s own finances, particularly in difficult financial times, can help one prepare ahead and provide options when making financial decisions.
8) Making plans for today and the future. You may make better plans for the future and comprehend how your current financial decisions will impact you in the future by having a basic awareness of personal finance concepts and practices.
9) Keeping families and parents stable. Handling a household, making plans for families, and protecting futures all depend on having a solid understanding of personal finance. The majority of Americans would grade their own personal financial comprehension no higher than a C. It’s critical for husbands, wives, and parents to make responsible plans for their daily lives, the development of their families, and retirement.
10) Young people who are financially literate contribute positively to their communities. A foundation of financial knowledge is set for the future. Possessing knowledge of personal finance enables people to identify their goals, launch enterprises and organizations, and contribute to the success of others as well as themselves and their families.
Nhi Tran