Finances FYI Presented by JPMorgan Chase
Most K-12 schools don’t provide students with education about everyday personal finances. Unfortunately, young adults will likely make costly mistakes without basic budgeting, credit management, and other essential money skills. These mistakes can have long-term damage on credit scores, the ability to support oneself during retirement, and wealth-building opportunities such as buying a home. They can also impact mental well-being and marriages.
Organizations like the National Endowment for Financial Education (NEFE) advocate for financial literacy graduation requirements, provide related research, and support advancing financial well-being. In one of its recent studies, NEFE found that a large majority of the adults who had the opportunity to take a training course took it, particularly those offered through employer-based programs (86%), college/universities (87%), and secondary education (91%).
If financial skills aren’t taught in school, how can we leverage that interest in learning and ensure that young and mature adults can access impactful education opportunities? And what financial skills should they be taught for “adulting” and navigating money decisions wisely?
What Is Financial Literacy?
A Financial Literacy brief from three nationally recognized financial literacy organizations identifies the following knowledge, skills, and confidence required for financial literacy:
- Money, credit, debt, and risk management
- Investment and retirement planning
- Skills to earn, save, invest, protect, spend and borrow money
They define financial well-being as:
- Having control over day-to-day, month-to-month finances
- Having the capacity to absorb a financial shock
- Having the ability to remain on track to meet financial goals
- Having the financial freedom to make the choices that allow one to enjoy life
Impacts of Literacy Skills Deficiencies
The National Financial Educators Council (NFEC) asked U.S. residents across the country, “During the past year (2024), about how much money do you think you lost because you lacked knowledge about personal finances?” The estimated average amount of money that lacking knowledge about personal finances cost people was $1,015 in 2024. If we generalize the results to represent all of the approximately 240 million adults who live in the U.S., lack of financial literacy cost Americans a total of more than $243 billion in 2024, the report said.
Other national indicators of the costs of financial illiteracy include:
- $5.8 billion a year in overdraft fees.
- $120 billion in credit card interest and fees each year.
- 90% of Americans say money has an impact on their stress level.
- 43% percent of all families in the U.S. fall short of meeting basic needs.
- 24% of surveyed divorced couples stated financial stress as one of the top factors for getting a divorce.
- 95% of millennials are saving less than the recommended amount for retirement.
- 1 in 3 Americans have more credit card debt than savings.
How to Ensure Young Adults Have Access to Financial Education
Parents play an essential role in preparing their children to make smart financial decisions as adults. Start financial education early by discussing money openly and providing hands-on learning opportunities like budgeting for a family activity or the weekly groceries. Teach age-appropriate concepts with resources like Money as You Grow.
Parents of young adults can guide their children through the basics of opening a bank account and applying for credit. Additionally, provide education on the importance of an emergency fund, saving for the future, and investing. Share books and resources about financial topics and encourage your children to come to you with questions or concerns at any age. Gradually transfer payments of expenses such as cell phones and car insurance as they start to earn their own money.
High schools, colleges, community libraries, and places of work can access the many online resources available as financial education curricula. With parents, educators, and community members working together, we can improve financial literacy and outcomes for our children and young adults.
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.
