Financial Education
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College Writing
Date 6/27/2007
Financial Education
“ US consumer debt has reached staggering levels after more than doubling over the past 10 years. According to most recent figures from the Federal Reserve Board, consumer debt hit $1.98 trillion in October 2003, up from $1.5 trillion three years ago. This figure representing credit card and car loan debt, but excluding mortgages, translates into approximately $18,700 per US household.”(Laurier)
There is a financial crisis in this country with individual debt. Many are forced into trying to fix the problem after it is fully developed. More should be done to educate all young people about financial management and debt in order to prevent them from serious and unnecessary debt.
Before you let your children swim in deep ocean waters, do you teach them how to swim first or do you let them learn as they go? Many young people leave their homes and go out into the world without basic financial education. Should the parents be responsible to steer their child in the right direction?
According to the Federal Reserve Bank over 40 % of all U.S. families spend more than they earn. (Source: www.federalreserve.gov)
However in an April 1, 2004 Children and Money article, Dara Duguay noted that 58.3 percent young adults are learning their money management skills at home (Jump$tart).
Even though statistics show that large numbers of families are in financial troubles themselves (spend more than they earn) and still most of the young adults get their financial education at home. The days of piggy bank savings may have worked in the past but today young people need to know a lot more about the economic aspects of life. We live in a competitive society and many young people grow up thinking they can afford to spend a lot more then they really can. Also they spend because everybody else is spending. It has become a necessity for young people to understand the differences between “needs” and “wants.” How to manage and budget their money should be a goal and parents need to play a major role in the family household finances showing practical use of economics in life. Parents should sit down with their kids and go over monthly bills such as power, water, gas, mortgage and rest of so call “needs.” Also, they should explain to them that the big screen TV, new car, cell phone, four wheeler, speed boat, and 20 pairs of shoes are things we may all “what” but do not necessarily “need” in life. Helping them develop good habits, responsibility and discipline with their money would hopefully help them avoid growing unnecessary debt and a stressful life. A good example would be to give their children an allowance on summer vacations. For 10 days of vacation they would be given $30 to see how they would manage the money. Parents should support their right decisions, not to spend all the money the first day since they have 9 more days left, but also make suggestions when they want to spend all the money in arcades or on candies. This little exercise will give the kids a taste of independence and the parents guide their spending.
However there are parents with poor financial education themselves, who do not feel comfortable sharing financial information with their kids. There may be other reasons such as family money – family secret. There is help for these families.
Non profit organizations like National Endowment for Financial Education (NEFE) and Jum$tart, are far ahead of the game. NEFE is a non-profit foundation dedicated to helping all Americans acquire the information and gain the skills necessary to take control of their personal finances (www.nefe.org). Jum$start first convened in December, 1995, the Jum$tart Coalition for Personal Financial Literacy whom direct objective is to encourage curriculum enrichment to ensure that basic personal financial management skills are attained during the K-12 educational experience (www.jumstart.org).
These organizations know there is need for more financial education among young people and they offer a broad menu of categories and financial solutions. Jum$tart also teams up with Citi Group and Merrill Lynch to provide financial literacy for all people (Citi Group – The Citi Commonsense Money Guide for Real People, and Merrill Lynch — Financial Literacy Improving Education)(Jump$tart)
Private and public schools are left behind. The web site of the Queensbury High School in upstate New York shows what they offer in their academic elective program. Classes such as Career Personal Finance, Accounting, Business Law and Sport/Entertainment Management are offered as electives (www.queensburychool.org.)
Also part of the financial education for young people should include knowing how to use a credit card. Young adults are going to face credit card offers by mail, email, and on college campuses. Most credit cards offers are tempting for young adults (new spenders). One