Booming programs to help younger generations achieve financial literacy

One of the most important transitions in young people’s lives is moving from high school to college, in part because it’s often the first time they take on financial responsibilities. Many are unprepared.

To help students To avoid developing bad spending habits that can lead to unpaid debt and other economic hardship, state legislators, colleges and universities are working to advance financial literacy among young people. New programs and initiatives are being introduced to help high school and post-secondary students learn how to responsibly manage credit card debt and budget for living expenses, among other efforts.

The Generational Gap in Financial Literacy

Students today know less about financial matters than previous generations, according to the Institute of Insurers and Annuities of America’s (TIAA) 2022 report titled “How Financial Literacy Varies Among American Adults “. The report uses questions from the TIAA Institute-GFLEC Personal Finance Index (P-Fin Index) which measures overall financial literacy and personal finance knowledge in eight areas including earning, consuming, saving, investing, borrowing/ manage debt, insure, understand risk, and identify sources of information to consult.

The study reveals that while Gen Z and Gen Y answered 42% and 46% of the questions correctly, respectively, the older age groups scored more than 10 points higher in some cases: Gen X had 51% correct answers, baby boomers 54% and the silent generation. 54 percent. Disparities in financial literacy also exist by race and ethnicity. White respondents answered 55% of the P-Fin Index questions correctly on average, followed by Asian Americans (54%), Hispanics (38%) and Black Americans (37%).

College students are also sounding the alarm, as more than one in four say they are not ready to be financially alone, according to the “2022 College Student Financial Survey” conducted by WalletHub, a personal finance website.

Amid rising inflation and the financial impacts of COVID-19, 86% of students surveyed said the pandemic has made them more concerned about their financial future, although it pushes them to be more responsible on the job. plan, and 79% said their financial literacy had improved. since the start of the pandemic. Sixty-seven percent see themselves as “savers” rather than “spenders.”

The ongoing financial education movement is showing progress, but more needs to be done, experts say. Twenty-eight percent of older adults have participated in a program aimed at tackling financial illiteracy, according to the TIAA, and that figure rose to 35 percent among Gen Z. But the TIAA calls that number “too ​low” and urges more primary, secondary and post-secondary financial education with a focus on diversity and inclusion to ensure that the needs of diverse socio-economic groups are considered in content and delivery.

Many states have turned to legislation for help in the fight to educate high school students about financial literacy. In 2022 alone, 32 state governing bodies introduced actions related to tax education, according to the National Conference of State Legislatures. Some states have instituted requirements for half-credit financial literacy courses.

To graduate from high school in Florida, students must complete a half-credit course in financial literacy and money management beginning in the 2023-2024 school year. Similar legislation, due to take effect in the 2024-2025 school year, has also been imposed in Georgia and Michigan.

Around 22% of secondary school students currently have access to financial education, an upward trend from 16% in 2018. Thanks to new curricula and legislation, this figure will increase to around 40% in the future, according to “State of Financial Education”. ,” a 2022 report by Next Gen Personal Finance, a nonprofit that works to bring financial education to high school students through curriculum development, advocacy, and teacher training.

NIU is working to shut down Financial Knowledge Gap

Anne Hardy
Anne Hardy

To help students achieve economic stability, Northern Illinois University (NIU) launched Student Financial Counseling Services in 2021. Three full-time counselors work with students to develop a personal, multi-year financial plan. The department focuses on financial aid, but assistance extends to budgeting, using credit cards, loan repayment, and more. To date, counselors have met with nearly 1,200 students, says Anne Hardy, director of scholarships and student financial counseling services.

NIU was prompted to provide such counseling services to address the lack of financial literacy of underrepresented populations on campus. About half of NIU students are first-generation and about the same percentage belong to a racial or ethnic minority group, Hardy says — and nearly half are eligible for the Pell Grant. Many NIU families are unfamiliar with the college process, and Hardy’s department says it’s imperative to explain the basics of money and financial aid to NIU students and their families.

One student taking advantage of NIU’s resources is Sergio Dondiego, a freshman who visited a financial counseling services booth on campus. The counselor encouraged him to apply for a variety of scholarships – from national scholarships to on-campus options with specific criteria, including those for studying abroad. By simply meeting with an NIU Financial Advisor and completing a Financial Pledge Task (Scholarship Application), he qualified for a $500 Financial Pledge Scholarship.

Some scholarships require essay submissions, and Dondiego, who is Mexican, has found these to be his favorites, as he learned so much about his parents’ past as immigrants to America by talking with his mother about essay questions. .

Based on his experience, Dondiego recommends others seek financial counseling services on their campus for help with scholarship applications and to be encouraged to meet deadlines. He has developed a strong bond with his financial advisor and plans to contact them again.

Hardy sees on-campus financial counseling resources as a growing trend in higher education, especially as financial concerns, which have long been a source of stress and anxiety for students, have been further exacerbated by the pandemic. Financial wellness is an essential part of creating a positive student experience, she says.

College is often the first time people need real-life money management skills, Hardy says, and it’s important for students to establish good financial habits as early as possible.

Nikki Brahm is senior editor for OVERVIEW of diversity.

This article originally appeared in our December 2022 issue.

Louis R. Hancock