One of the key factors missing in our educational system is financial education. We teach our children how to add, subtract, divide, multiply, etc. but no where do we show them how to apply these simple principles in real life. We are creating a young population that knows the basic mathematical functions, but with no knowledge of when to apply the functions to financially improve their lives. Arming our younger generation with the skills to manage their finances can prevent them from getting into financial difficulties in the future or even filing for bankruptcy.
Credit card companies are continuously targeting our younger population with offers of credit that allow them to buy now and pay later. As a young college student I remember being offered credit cards without really understanding what it would cost me financially if I charged something now and paid it later. This is where financial problems can initiate if a person is not careful in managing new credit and debt.
We have assumed for the most part that parents should provide or will provide the financial education necessary for people to make financially responsible decisions in their lives. The reality is that many young adults are not prepared and do not understand, debt, interest rates, and the effect of paying debt over time. Without this understanding, it is easy for many young adults to succumb to a world of credit card debt where you enjoy the benefits today but may suffer the consequences later.
Our educational system should take a proactive approach to preventing future financial problems for many students by offering financial education classes that examine debt, budgets, and financial planning. It is important that our younger generation understand the effects of credit card use and debt management. These principles have to be reinforced at home and in our communities to function properly.
The focus in our society and media has been on consumption rather than on being conservative with one’s money, and buying what is affordable. Providing our younger generation with the financial education within our school system will hopefully help guide them to make better financial decisions in purchasing products and services. Although there are unavoidable life events that may push people into financial problems, there are also many avoidable situations that are preventable. Having a better understanding of the time value of money can be a powerful preventative tool for managing your money now and your future financial health.