The Importance of Financial Literacy

By the time most students graduate from high school, they have little to no knowledge on how to handle their personal finances. Many people go straight from high school to the workforce and must learn to handle their own paycheck and begin dealing with big financial decisions, such as paying rent for an apartment, buy a car, and paying taxes. Even those who go to college must still deal with large financial decisions, such as taking out and repaying student loans and being away from their parents while also having the ability to spend their money however they want and open multiple credit cards.

Why don’t students understand the importance of personal financial literacy? This lack of knowledge is due to the fact that less than 20 schools require that students take any kind of financial literacy class during their high school careers; out of these schools, only 4 require that these classes are taken for an entire semester. Here are a few reasons why it’s important for young adults to be financially literate.

Reinforces financial responsibility

When students have the opportunity to learn financial literacy, it allows them to become more responsible, with their finances and in general. Students learn how to manage the money they earn and to avoid spending it all at once, because they realize there will be bills they must pay in the future.

Teaches important life skills

Everyone needs to understand how to open a bank account, pay their taxes, and take out and repay loans. Taking a single financial literacy class in high school can teach the basics of these skills and give students knowledge that will greatly benefit them later in life and help them avoid a heavy financial burden.

More successful in school

Young adults who have a basic understanding of finances are usually more successful in school because they understand the value of an education. They realize that if they’re more educated, they’ll be more likely to find a higher paying job, which leads to better financial opportunities.

Better personal success

When young adults have a rudimentary understanding of basic life skills, they succeed in life more quickly and easily than their peers who are not financially literate. Instead of taking valuable time to learn financial literacy and possibly making serious mistakes while learning, young adults who learn these skills in high school have a low-risk environment where they can familiarize themselves with financial skills and then achieve proficiency in these skills once they enter the real world.

New to Financial Literacy? There’s an App For That

For young people, particularly in high school or college, the ins and outs of managing money may be somewhat foreign. Most public schools don’t offer courses in personal finance anymore, and in college, such courses are electives at best. However, financial literacy is crucial to survival in the modern world. Young people especially need to develop skills like budgeting, paying bills on time, and regular savings if they want to reach financial stability and be prepared to apply for loans and credit cards. Luckily for these technology natives, there are several smartphone apps that can help build and nurture these skills.

Better Money Habits by Bank of America and Khan Academy. Millennials love nothing more than a YouTube tutorial. This video series walks viewers through the the basics of bank accounts, budgeting, balancing checkbooks, etc, which are all crucial pieces of knowledge for any person.

Left to Spend: A beautiful minimalist app, Left to Spend visualizes your budget into committed money, bills, and, as the name suggests, what’s left to spend. For visual learners, this app beautifully displays, in bar graphs, where your money is going and the remainder you can spend at your discretion. This is an especially useful app for college students who are just learning about budgeting their money.  

LearnVest: With this app, a financial planner is always at your fingertips. LearnVest is an all-in-one location for calculating your net worth, planning for long-term goals, suggesting insurance plans, and offering news and practical advice for your financial prosperity.  

Prosper Daily: Formerly BillGuard, this app analyzes your spending, calculates your credit score, and stores all of the data from all your cards and accounts into one place to help you see where your money goes and how your activities contribute to your scores and goals. With more young students opening credit card accounts these days, this app can be incredibly valuable, allowing users to maintain their credit early on, in order to prevent themselves from winding up in any unnecessary debt. 
With tangible apps like these, young people can get a handle early on how to manage their money wisely and plan for their futures.