Filling the financial literacy gap through positive youth development

By Darcy Cole

In America, young adults owe over $1 trillion in debt (the top two debt sources being mortgages and student loans), with nearly 70% of millennials living paycheck to paycheck. These statistics demonstrate a systemic issue and the need for increased financial literacy education for all young people to both prevent and manage debt. Many schools (and for that fact, families) do not place enough emphasis on teaching financial literacy skills to youth. This gap is an opportunity for youth development organizations to step in to fill a crucial need. Our programs can serve as a safe environment for youth to learn essential financial literacy life skills. 

Ramsey Education's Financial Literacy Crisis in America: 2023 Report further demonstrates the need for increased attention to financial literacy for U.S. adults. Findings include that:

• 88% of adults said that high school did not leave them "fully-prepared" to handle money.
• 74% of adults said they would have made fewer money mistakes if they had learned about personal finances in high school.
• 76% of adults said they would have felt less money-related stress if they had learned about personal finances in high school.

Financial literacy is the ability to understand and use financial skills to make informed decisions and achieve financial goals. It can help people avoid debt, save money, and grow their wealth. Financial literacy skills contribute to a sense of financial security and well-being. Components of financial literacy include, but are not limited to, understanding financial concepts, budgeting, saving, investing, spending, borrowing, understanding credit, asset building, how to reduce debt, and avoiding scams. 

Financial literacy is a skill that can be taught to all people. Low financial literacy has lifelong implications. It can result in:

• Threats to individual and family well-being (especially for underserved and low-income populations).
• Being more susceptible to predatory lending.
• Costly errors in managing debts and expenses.
• Lifelong financial inequity.
• Missed wealth-building opportunities.
• Reduced access to higher education and professional development.
• Being trapped in cycles of poverty and debt.

Youth development programs have the opportunity to positively impact peoples' lifelong financial trajectory. As youth development professionals, we can incorporate financial literacy skills by intentionally placing youth in learning and leadership opportunities that naturally lend themselves to learning literacy skills. Potential learning opportunities include having youth serve as fully-engaged youth treasurers, participating in organizational budgeting processes, advocating for funds that align with organizational goals and community needs, tracking income and expenditures, helping provide financial oversight, and learning financial software programs or receiving financial mentoring from adults. Additionally, National 4-H offers several curriculua and activities that can help teach financial literacy skills to young people.  

As youth development professionals, where are you seeing the biggest lack in financial literacy skills? How does or could your organization help program participants learn essential financial literacy skills?

-- Darcy Cole, Extension educator

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