When it comes to financial literacy, it maintains to be a major topic of discussion within the financial industry. Recent polls have displayed that young Americans are struggling in this area, which is backed up with statistics. During the disastrous housing bubble, millions of Americans went beyond their limits and created a long trail of debt. College students in America have generated over $1 trillion in debt with college loans. In 2014, the average credit card debt for a household was more than $15,000.
The youngest generation, which is called the Millennials, have become of age in one of the darkest times in economics. This period of time has been the biggest influence in many of the financial habits that currently exist. The FINRA Investor Education Foundation did a survey earlier in the year and discovered that the Millennials were lacking in financial knowledge. Between the ages of 18 and 26, there were only 18% of the adults that could answer 4 to 5 questions correctly.
Majority of them started their adult lives, during the worst downturn of economics in generations. Unfortunately, a lot of them are struggling within the economic conditions and have some of the lowest levels in financial literacy. At the same time, they are battling with concerns involving their debt.
Here is how you can apply money management with the next generation.
An early start.
Educators in personal finance suggest introducing financial literacy, when your child is at a pre-school age. This early knowledge will carry a long way in developing an understanding of financial literacy principles. The lessons can start as early as 3 years old. You can start by delaying gratification, such as not buying something until the money has been saved to make the purchase. You should establish 3 jars for saving. One jar will be labeled for spending, one for sharing, and one for saving. Whenever a child receives any money, they will decide how the money will be divided into the 3 jars. The sharing jar establishes a mindset to use money to help others.