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If there is one positive fall-out from the credit crisis and the prolonged financial downturn, it is that it has prompted many Americans to look to acquire greater financial know-how. According to a recent survey by the direct marketing research company Mintel, the economic crisis has impelled three out of every four adults (75 percent) to seek to increase their financial knowledge.
Not wanting to repeat the mistakes that led many into financial trouble during the subprime mortgage crisis and the credit debacle that followed, many Americans have begun to look to classes, books, websites, family and friends, and professionals to further their financial knowhow. A third of the adults surveyed had already begun researching financial topics, while another 43 percent said they intend to learn more in the days to come.
Young adults, or the so-called Echo Boomers (people aged 15-32) crave greater financial literacy the most. According to the survey, about five out of six (84 percent) of young adults said they plan to or have already started to educate themselves about financial matters. This is the first major economic recession adults under age 45 have experienced, and it has provided them with a real-life experience of the anxiety produced by economic uncertainty. Although a shock to some, it has also served as a wake-up call to motivate younger generations to save and invest their money. The contrast of these past years has provided teens and young adults with an understanding of the importance of financial knowledge.
For parents of teenagers, in other words, there may never be a better time to educate their youngsters about the ins and outs of managing their personal finances. In addition to the greater awareness created by the credit crisis about the importance of financial savvy, the new Credit CARD Act, which steps into effect this month, also puts greater emphasis on parental involvement in teen finances. The new law requires young adults under 21 to have a co-signer (read: parent), when they apply for a credit card, effectively giving parents an opportunity to stay involved in their kid’s financial behaviors even when they leave home.
Most teens prefer to learn about finances from real life experiences rather then in the classroom. The best way to educate teens about finances, according to professionals, is to use everyday opportunities to talk about money with your teen, share your own experiences (it helps being a positive role model with your own finances), and encourage your teen to follow the news, particularly highlighting news items that affects their present or future finances.
In addition, in these days of abundantly available online financial education resources, take advantage of some of the numerous financial literacy websites out there. Here are some of our favorites:
Bankrate.com. Whether you’re looking to learn more about credit cards, college financing, or mortgage and auto loans, Bankrate.com offers a wealth of resources. For general personal finance knowledge, check out their Life & Money section.
CNN Money 101 presents an excellent step-by-step guide to gain greater control of your financial life. Through a series of 23 lessons, the site offers an introduction to all the basics of personal financial management, including how to set priorities and make a budget.
MyMoney.gov (sponsored by the federal government) offers financial literacy education for all age groups on all sorts of financial topics, including a whole section for kids. For example, check out the booklet Money Math-Lessons for Life, which gives kids practical experience in working through a series of real-life scenarios involving financial decisions.
