Hello all and happy new year. Crystal and Angelica and I are incredibly busy - with college applications, school, and whatnot - but we have a lot of great ideas for content in mind. Hopefully we are going to roll that out sometime at the end of this month, when our first semester officially ends. We can't wait!
As some of you may know, I go to a high school that requires us to work on year-long projects. As freshmen, we focused on environmental issues (I did climate change). As sophomores, we focused on world issues (I researched terrorism). As a senior, we must focus on social issues, such as, but not limited to, food insecurity, student loan debt, mental health stigma, etc. I chose financial illiteracy.
Why? You might think: HOW is this a social issue?
First: social issue means that it affects society somehow. A lot of issues have commonalities. They're multi-faceted and not mutually exclusive. For example, climate change inequality, an environmental issue, is also a social issue.
I feel like financial illiteracy is a topic we all understand - at least, can comprehend at the most basic level. Hardly anyone will think financial illiteracy doesn't exist, and I can't think of a person who doesn't think this sort of education is valuable. In addition, financial literacy and competency rates are falling. Only around five states require and mandate this sort of education.
This means a lot of things. For one, it means that students are less equipped for the future. It means more students falling prey to bad loans. They're trapped in the same cycle of poverty that trapped the generation(s) before them. Bad credit. Bad loans. No understanding of inflation, time value of money, investing, etc.
In my project, I worked with a personal finance advocate to learn how to better tackle this issue. I researched, compiled information, and presented some of it to her company's financial education team. I also presented similar information to my classmates.
I believe financial literacy is something that should be accessible to everyone, no matter what age. That's mainly why I started this topic, and I am grateful to really spend more time eking out hard data and facts to support this concept. I am grateful for the personal finance advocate I worked with and the valuable information I received from her.
If you want some facts, here they are.
18% of 15-year-olds have little to no financial comprehension.
In a study conducted with high school SENIORS, these students scored on average less than 50%. Keep in mind that these students are almost adults and getting ready for that next phase in their lives.
Meanwhile, financial illiteracy affects more minority groups as well. This social issue affects women disproportionately, as women are, on average, behind their male counterparts. Meanwhile, when it comes to unbanked households, Black, Latino, Native American, disabled head of households, and youth head of households are more likely to be unbanked and/or underbanked.
What does unbanked have to do with this? Well, it's fairly simple. Unbanked means not having any affiliation with banks or financial institutions. It means that a lot of these households are not receiving adequate financial services or comprehension or knowledge, information, etc.
Some causal factors that I researched have to do with upbringing. For example, children will emulate what they see. If your parents made unsound financial decisions, it is more than likely that you will make those same decisions. This leads to cycles of the same issues within the same families. Other causal factors have to do with the economy and the world. Spending influence, buying power, have all greatly increased in the past decades. This means your financial decisions will have more impact on your livelihood. Bad decisions will lead to far worse consequences in the long run.
Consequences of financial illiteracy include bad spending habits, low morale, low standards of living, and even mental health conditions and suicide ideation. One of the leading causes of the college student suicide rate is their high credit card debt. These students don't know what to do with what they have. This is not good.
Honestly, this sort of issue is hard to deal with. After all, what more can we do? We already have a lot of government programs - which educate citizens on the importance of safe monetary habits. We have programs for children and young adults. There's supposed to be legislation on this soon. What more can we do?
What we can do is make this sort of conversation more frequent in everyday life. Learn. Truly learn and research. Don't just take things for their face value. There's so much to understand about this world, and it would be a shame to live within it without any idea of its forces.