In today's era of unprecedented economic complexities, when the economies are fluctuating, mounting student loan debts, very uncertain job markets, and ever-changing financial landscapes. Acknowledging the fact that financial decisions taken in early adulthood can have lifelong consequences. Young adults are facing a range of unique challenges and to tackle these challenges there is an urgent need for financial literacy in youth. Lack of financial knowledge in our education system is also one of the reasons behind this. Studies reveal that there is a concerning gap in financial knowledge in young adults. This draws attention to the need for comprehensive financial literacy education in youth.
'Financial literacy is the combined knowledge and skills required to make responsible as well as informed financial decisions that contribute to a sense of financial security and well-being.'
It can be interpreted quite easily from the above definition that financial literacy is a very essential aspect of early adulthood and should be taken sincerely, to prevent any detrimental effects of uninformed decisions taken at a young age. Knowledge of financial concepts like saving, investing, spending, and borrowing is the foundation of financial literacy. Also being educated about asset building, learning how to reduce debts, avoid scams, and understanding credit management is critical to lead a healthy financial life.
According to a study conducted by the National Endowment for Financial Education (NEFE), only 24% of millennials demonstrate basic financial literacy. Furthermore, a global assessment by the Programme for International Student Assessment (PISA) found that only one in five 15-year-olds possess the knowledge and skills to make financial decisions.
These studies indicate that a large part of youth is illiterate on this essential topic. Financial illiteracy can have profound and far-reaching repercussions For instance, not having a firm understanding of budgeting, saving, and investing young adults are vulnerable to financial pitfalls that can impede their long-term financial security.
Acknowledging the utmost need to understand the urgency of the situation, policymakers and financial institutions should prioritise financial literacy education for the youth. A small progress can be seen in this direction as many schools are incorporating financial literacy into their curriculum. This equips students with essential money management skills. Many other campaigns are being run by professionals and related institutions to educate young individuals, online resources and community outreach programs are helping in empowering the youth to navigate through the complexities of personal finance.
In the face of an ever-evolving financial environment, the significance of educating youth about financial literacy cannot be overstated. Providing young adults with the necessary skills and knowledge to make informed financial choices empowers them to establish a secure groundwork for their future financial stability. By fostering cooperation among educators, policymakers, and community members, we can work together to narrow the gap in financial literacy, ensuring that today's youth are equipped to tackle the financial complexities of the future.