Why is Financial Literacy Important for Our Youth?
America’s education system has historically excluded financial education from its requirements. Despite money being essential to our survival, less than half of our states include financial literacy education as a required curriculum. In a 2019 Financial Industry Regulatory Authority (FINRA) study, only one-third of American adults could answer at least four of five financial literacy questions on fundamental concepts such as mortgages, interest rates, inflation, and risk. This lack of financial education especially impacts the underprivileged Americans, who do not have access to financial advisors, and estate planners. Banks and other lenders thrive off of the lack of knowledge of the American consumer.
How does this impact our students? New graduates enter adulthood with the ability to acquire debt with little or no knowledge of the impact of that debt. Soon, many find themselves caught in a debt trap and struggling to pay off staggering student loans and credit card debt. They may even take on debt to pay off other debt and expenses.
Also, nearly 34% of Americans have poor to fair credit scores which results in their paying high interest rates when financing cars and mortgages. Leasing deposits can also be substantial when you have bad credit. Additionally, 54% of Black Americans and 51% of Hispanic Americans have no or poor credit scores according to a study of 5,000 Americans performed by Credit Sesame.
Frost STEAM Labs aims to help educational institutions fill in the financial literacy education gap.
