Children growing up during the Great Depression watched their parents struggle against extreme hardships. But the "scrimp and save" mentality they learned slowly waned as Baby Boomers and Generation Xers found it easier than their parents to purchase homes, buy cars and go to college.
Now a new generation - Generation Y - is maturing. Are these teens and 20-somethings prepared for the financial responsibilities adulthood brings? Many would argue not.
Today's young adults face an enormously complex and competitive financial world: Many enter the workforce saddled with five-figure student loans; skyrocketing housing prices increasingly have put homeownership out of range; and easier access to credit without proper training to manage it has damaged credit scores for many young adults before they've even grasped what one is.
In fact, four out of five high school seniors graduate without having received any classroom instruction in personal finance - a statistic borne out by the newly released survey results from the Jump$tart Coalition for Personal Financial Literacy. It found that the average high school senior answered only about half of the basic financial knowledge questions correctly - the equivalent of a failing grade.
"Since we began conducting this survey in 1997, the average score has actually declined slightly," said Laura Levine, Jump$tart's executive director. "The clear message is that over the past decade students have demonstrated a consistent lack of knowledge about money management issues. What's equally clear is the responsibility we share for helping them to do better."
Although some people think parents should bear primary responsibility for teaching their children basic financial skills, many parents lack the expertise, confidence or time to do an adequate job. And, while several states have already mandated financial literacy courses as a condition for graduating, many other state legislatures and school districts still grapple with how to best develop and pay for such curricula.
Numerous grass-roots efforts have sprung up. For example, as part of National Financial Literacy Month, the Federal Reserve Bank of Chicago and Visa Inc. are co-hosting the second annual Financial Literacy and Education Summit on April 21, 2008. This free, online roundtable discussion brings together leading public policy, education and private-sector financial education advocates to discuss how best to help Generation Y members establish a sound financial future.
Summit panel members, moderated by personal finance expert Jean Chatzky from the Oprah Winfrey Show and the Today Show, will address such topics as:
- How do we measure whether young adults have sufficient knowledge and skills to successfully navigate financial choices they will face, given the current economy?
- What are the most pressing personal finance challenges young adults face today?
- What specific solutions do we have to alleviate the problem of financial illiteracy among young adults and what role should federal, state and local policymakers play in these solutions?
To watch this important summit online, go to www.practicalmoneyskills.com/summit2008.
In the meantime, there are numerous resources you can tap to further your kids' financial education. For example, Jump$tart offers a clearinghouse of more than 700 books, pamphlets, DVDs and other materials on financial literacy topics (www.jumpstartclearinghouse.org). And What's My Score, a financial literacy program sponsored by Visa, provides tools to help young adults understand the importance of understanding and improving their credit scores (www.whatsmyscore.org).
Make it a priority to listen in on Financial Literacy and Education Summit 2008 to learn what you and your community can do to protect the financial security of our next generation.
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