Today’s children are tomorrow’s leaders and influencers. We must equip them with the tools they need to be successful.
This includes knowledge about money, credit, debt and investments. Understanding how money works is the cornerstone of financial stability and success. It is critical to the future of our economy that our children be financially literate so that they can make sound financial decisions.
Young people in developed countries including the United States scored lower on a financial literacy survey than middle-aged individuals, according to a global financial literacy study conducted by leading research organizations.
Research shows there is a precise chemistry for effective retention of financial literacy basics. A recent study, conducted by the National Endowment for Financial Education, concluded that the amount and timing of financial education matters.
The study found that longer financial literacy trainings have the most impact if they occur immediately before a financial decision is made.
The study also found that small, timely financial literacy trainings have the same impact as extended trainings, if the extended training does not occur right before a financial decision. The study noted that the retention of financial literacy education diminishes over time.
What does this mean on a practical level? For financial literacy to have the most positive impact, learning should be lifelong and targeted to coincide with financial milestones.
It is important to start early and teach basic financial skills throughout childhood. In addition, in-depth financial literacy should be taught before each financial decision.
For example, before a youth opens his or her first bank account or credit card. Leaving home for college is also a financial achievement for most youth, as it is often a rite of passage and the first time youth navigate financial decisions on their own.
Florida is making progress. In 2014, the state adopted a financial literacy component to its education standards. In addition, there are many free resources available to Floridians. The Florida Office of Financial Regulation (OFR) provides valuable financial literacy information through our online Consumer Knowledge Center, Florida’s Chief Financial Officer offers interactive financial literacy games for children.
The North American Securities Administrators Association offers investor education programs for middle and high school-aged students.
The OFR is committed to our mission of facilitating the growth of the financial services industry while protecting Floridians. Supporting the development of smart financial habits is one of the ways we are furthering that mission.
April is National Financial Literacy Month. I urge you to use the resources available this month, and year-round, to empower children with financial literacy so they may navigate future financial decisions.
Drew J. Breakspear is Commissioner of Florida’s Office of Financial Regulation. Column courtesy of Context Florida.