Recent research by a major financial firm revealed that today’s teenagers are much less prepared than their parents were to make good financial and investment decisions. The research showed children are not being taught about money in the home, nor is there much of an effort in public schools to do so, with only 10 states requiring financial education classes. A majority of youth surveyed said they were unprepared to face life’s financial decisions.
Having worked now with at least three different generations, I would like to broadly generalize about what I have seen in them. The Greatest generation, or the depression babies, were some of the best at managing money. Oddly, few of them had any formal financial training. They grew up during a period of great sacrifice and shortages, and they quickly learned that they needed to take responsibility for their own survival. Good money management was literally a matter of life or death.
The Baby Boomer generation benefitted from their parents’ “Hard knock life” education and as such, were largely raised in financial stability and even wealth. Parents who had seen very tough times taught the Boomers to learn a skill, work hard, and spend wisely. Not all learned the lessons, but many did.
The third generation was raised in an abundant society where many of the painful lessons of the past had been forgotten. As such they grew up thinking the solution to every problem would be freely provided to them by someone else – either a parent or the government. The “Everyone gets a trophy” mentality did not transfer well to the reality of money management.
Though our nation is not currently suffering under the pains of war or a great depression, the seriousness of each persons’ financial future remains the same. The need to educate ourselves on how to take care of our family financially is just as critical. But again, the question is how do we do it?
A few months ago, a group of college students formed an investment club and asked if I would be willing to oversee it. In the meetings that followed I was very encouraged as they came each time prepared to listen and share the things they were learning. Their grandparents learned largely by the things which they suffered. These youth recognized that if they could learn to manage money early in life, they might avoid some of the suffering. By their actions they were taking charge of their own financial futures.
Americas youth have a financial literacy problem that the schools are not going to solve, and spendthrift politicians certainly don’t have the answer. However, with the vast educational resources now universally available, the solution to the problem is within reach of every individual. All it takes is the determination to decide one’s own future. The cool thing about good financial management is that it can be approached slowly and learned by doing. Yes, you will make mistakes but as my little investment club realized, the biggest mistake is to not get started.
Dan Wyson, CFP® is author of “The Gold Egg,” and “21 Financial Myths” and owner of Wyson Financial/Wealth Management 375 E. Riverside Dr. St. George, UT 84790 – 435-986-9525 – Securities and Advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a registered investment advisor