The Importance of Financial Literacy

by Jan Mester

Call it what you will: financial literacy, financial capability, money sense. Studies show that many young people leave home without it. According to a Junior Achievement 2012 Teens and Personal Finance survey, 34% of youth report that they do not budget or manage their money. Where do they get their information? The survey says, 24% of teens learn how to manage money in school or from teachers.

There’s a financial skills gap to fill. It’s up to everyone-parents, teachers, policymakers and business leaders-to help youth understand the value of planning financially for the future.

“As a society, we are seeing a rise in credit card debt with young people between the ages of 20 and 24 among the fastest growing group to declare bankruptcy,” according to

The March 2012 report High Debt, Low Information: A Survey of Student Loan Borrowers conducted by NERA Economic Consulting found that about 65% of college students say they misunderstood or were surprised by aspects of their student loans or the student loan process.

Nan Morrison, CEO of the Council on Economic Education says financial literacy, at its root, is really about recognizing and evaluating choices and developing a habit of thoughtful discussion around money choices. And it’s important to develop these skills at a young age.

ASCD Education Update, Volume 54, August ,2012