Financial literacy may be defined as possessing the requisite knowledge and skills on a variety of financial matters to facilitate effective decision making that can go some way into helping you achieve personal, family or community goals. You can never be too young to start learning about finance. The benefits of gaining financial literacy early on could be too great in the long term for the youth, their parents and other stakeholders to ignore. However, recent statistics by the National Financial Educators suggest that the task is more daunting than it appears.
According to their findings, about 1300 youth scored an average of 58% on a national financial literacy examination. The findings further reveal that more youth are dropping out of school as a result of financial problems than ever before, with up to 85% of those remaining carrying serious credit card debt. It might be a reason why the 18-25 age range is the fastest growing demographic for bankruptcy.
Is there a viable framework that could be used to increase financial literacy among the youth?
How to improve financial literacy among youth
Embracing gaming
The youth have embraced technology, thanks in part to the development of gaming culture. With new developments on gaming comes a better understanding of the technology of the day. Since the first virtual game was developed, children have quickly taken up an understanding of technology in order to enjoy this favorite pastime. The high interest in gaming has combined with a rapid level of technological advancement to enable increased tech literacy. In many instances, the youth might understand modern technology better than their parents.
This can be used to increase financial literacy. Teaching kids finance within the constraints of these avenues will improve their ability to comprehend these topics, facilitating higher literacy within this demographic. The change in approach towards a more virtual and game-centered education, with which the youth are comfortable, could be pivotal to boosting literacy levels.
Using diverse content
Expecting all youth to learn about finance through a singular and constrained medium, such as books, could be a major reason why financial literacy levels among the youth are shockingly low. Since everyone has their own learning curve, it can be difficult to provide efficient financial education across the board.
The use of financial literacy software to promote learning by providing diverse and relevant content could help address the disparity in the ability of the youth to learn. This way, more kids will be able to learn about finance at their pace and through a preferable medium.
Leveraging videos
Did you know that audiovisual content is the most successful tool to draw the attention of web users? Making use of a financial literacy app that also features videos will increase the ability of kids to learn about finance. Videos are a great educational tool because they can be diverse and informative, while keeping the attention of learners. They are easy to make, and can be customized to meet the need of individual learners as opposed to a blanket approach to financial education.
Increasing parental involvement
The role of parents in helping their children develop financial habits, attitudes and behaviors, as well as pick up knowledge is often overlooked, despite its significance. A 2015 study points to parents as the primary and preferred source of this type of education. By engaging with their children on a number of financial matters, parents will enable them develop an early understanding that could lay the groundwork for improved literacy in future.
Simple experiences early on in a child’s life such as receiving an allowance, developing a home savings account and participating in adult financial activities such as accompanying their parent to a bank have been linked with increased financial literacy.