Stuyvesant High School in lower Manhattan has taken a pioneering step by introducing a yearlong personal-finance course for its students. This program is unique within the New York City public-school system and is one of the few available nationwide. While some US schools touch upon financial literacy, there is a lack of comprehensive yearlong programs. However, this needs to change quickly. According to a recent report from the National Financial Educators Council, financial illiteracy has reached epidemic proportions, with substantial financial consequences. The report estimates that in 2022, the average American incurred $1,819 in annual personal finance errors, resulting in over $436 billion in losses nationwide. Teaching young people how to manage their money is not only crucial for their financial well-being but also for their mental health. Individuals with significant debt are more likely to experience depression and even contemplate suicide.
Furthermore, financial illiteracy seems to be worsening, particularly among younger generations who are less financially knowledgeable compared to older generations. Take millennials, for example. A decade ago, they considered themselves confident and competent when it came to finances. However, a report from The People’s Federal Credit Union (TPFCU) revealed a striking disparity between millennials’ financial knowledge and their financial behavior. This imbalance is referred to as a “financial literacy gap.” Millennials and Gen Zers may not be technically broke, but they often spend more than they earn, accumulating substantial long-term debt.
Approximately two-thirds of millennials carry some form of long-term debt, and almost one-third have multiple debts. The report also noted that last year, 30% of millennials with checking or savings accounts frequently overdrew their balances, spending beyond their means. Additionally, around 50% of millennials are unprepared for unexpected expenses and have no savings for emergencies. Let’s not forget the $1.6 trillion in outstanding student debt that will soon come due, adding to their financial burdens. It is understandable why more than half of millennials feel overwhelmed by debt and believe that the education system failed to adequately prepare them for financial responsibilities.
As alarming as millennials’ financial situation is, the next generation, Gen Z, fares even worse. With high levels of student debt and a lack of long-term savings, young Americans are not well-equipped for financial success. Researchers from the TIAA Institute and the George Washington University School of Business have shown that Gen Z possesses the lowest level of financial literacy across all generations. Furthermore, an increasing number of Gen Zers are turning to TikTok for financial guidance. Despite their challenges, these young individuals often rely on self-proclaimed “financial influencers” without fact-checking their advice.
To address this growing crisis, mandatory financial education courses like the one offered at Stuyvesant High School must be implemented nationwide. Amidst a national debt crisis, Americans need to be taught financial literacy from a young age. Recent mandates by the House Education Committee indicate that new national efforts to boost financial literacy could be introduced in the coming years. It is high time that practical education takes precedence over content that lacks real-world relevance. A financially literate population will contribute to a healthier and more stable America, fostering an equal understanding of cents and sense.
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