| April is National Financial Literacy Month in the | | | | basic system of teaching people about personal |
| United States. Should you have a money party? | | | | finance, financial literacy is likely to remain an issue. |
| Or maybe take a tour of a local Federal Reserve | | | | But it's just an adult thing right? |
| or bank? Really - exactly what are you supposed | | | | Not so fast. Teenagers are one of the groups (if |
| to do for financial literacy month? | | | | not THE group) with the highest disposable |
| What is financial literacy? | | | | income - even if they are not the ones actually |
| Before we break out the cake and punch, we | | | | earning it. In 2006, teens spent nearly $190 billion. |
| should figure out what exactly financial literacy is. | | | | Over half of it was spent on food, apparel, |
| Simply put, financial literacy is a basic | | | | personal care items and entertainment. |
| understanding of personal finance and how it | | | | Yet, their financial literacy scores are on par with |
| applies to the money decisions an individual or a | | | | the adult Americans in the survey - meaning that |
| family needs to make. It can include basic | | | | they are no wiser about basic personal finance |
| budgeting, saving and spending knowledge and | | | | than many of their parents. |
| skills. It also covers having a basic understanding | | | | Why is this important? |
| of credit cards, consumer loans and mortgages. | | | | Teens are going to be making really big financial |
| And, let's not forget the ability to balance a | | | | decisions in just a few short years. These |
| checkbook. | | | | decisions include choosing a college and how to |
| Unfortunately, surveys and studies indicate that | | | | finance their education as well as living on their |
| the financial literacy of the average American is | | | | own for the first time. And while Mom and Dad |
| between 50% and 60% based on their ability to | | | | may be footing the bill for a good chunk of |
| correctly answer basic financial questions. If this | | | | certain things, there are still many new |
| were a real test, those grades would be close to | | | | temptations. |
| failing. And the scores have not changed much | | | | What if teens entering college do not fully |
| over the past several years that the surveys | | | | understand how long that $30,000 per year |
| have been conducted. | | | | student loan is going to cost them and how |
| Why is financial literacy important? | | | | much? What if they do not know the fees and |
| Financial literacy helps people make solid financial | | | | interest structure of that credit card they just |
| decisions in their personal life. It helps limit the | | | | got to buy pizza and gas with? |
| mistakes that people can make with their money. | | | | Getting started on the right financial foot with a |
| What kind of mistakes? Mistakes that can run the | | | | few basic pieces of knowledge can make a huge |
| spectrum from having an overdraft on their | | | | difference in the lives of today's teen when they |
| checking account (or 4 or 5) to paying extreme | | | | become tomorrow's college graduates and enter |
| interest rates on credit cards to buying a house | | | | the workforce. That is what Financial Literacy |
| that they cannot afford. | | | | Month is focused on: making sure that everyone |
| Sure not every mistake is a big one. And some | | | | gets the money education they need. |
| mistakes are lessons in the making. But without a | | | | |