Students graduating from high school and college this month have received training in many subjects to prepare them to have a successful life. Their classes likely included English, math, science, computer technology and history.
However, they probably did not receive any instruction on how to manage their personal finances.
In Sarasota or Manatee counties, less than 3 percent of high school graduates have attended classes on personal finances. They risk not being knowledgeable about finances and potentially a lifetime of poor choices on loans, credit, savings and spending.
This affects all of us. If your neighbor, children or grandchildren are making poor money choices, it will affect your future through increased social and government costs.
One example of not being financially savvy is failing to start a savings and investment plan at a young age.
Economic upheavals in the last 15 years have left young adults uneasy about making investments beyond savings accounts. By not investing properly, they are missing the opportunity to compound their money over a long period of time.
Another example is not understanding the impact of a low credit score on other aspects of your life. Credit scores can affect your insurance cost, employment opportunities and can result in increased interest costs. Some people do not understand how bank fees can be applied if they overdraw, because they are not aware of their account balance.
Becoming financially literate requires education in money management skills such as balancing a checkbook, setting up a budget, using credit wisely and investing to meet your goals. Parents, schools and organizations such as Junior Achievement can teach these basic skills. You can help by teaching, mentoring or volunteering for these programs.
However, the greatest impact occurs by demonstrating the skills and being a good example in your daily life. Personal finance skills sometimes are not easy to stick with as they can require time to see positive results. Having a mentor, parent or neighbor demonstrate by example is key in making these skills and processes become habits.
We can all model good money management habits to children, grandchildren and students. We can demonstrate the value of saving for a purchase rather than putting it on credit. Show them how to figure out the added cost of interest and fees, versus saving and paying with cash.
We also can show them how we divide our income to pay basic expenses, savings and discretionary expenses. For young adults looking to attend college, we can help them calculate the long term costs of loans. You can point out the advantages of scholarships, grants and going to a school that meets their needs, rather than the most expensive.
If you are not sure how to get started, check out Junior Achievement (JA.org), Money Smart from the FDIC, National Endowment for Financial Education (NEFE.org), The Mint (TheMint.org) or your local bank for programs and resources.
If you want to have government programs such as Social Security, Medicare and Medicaid available in the future, consider what you can do to help younger generations become smarter about money. If you have life skills, such as knowing how to manage credit cards, find a way you can pass on to others through daily interactions. We can help younger generations have brighter futures by demonstrating how to be smart with money.
Tom Roberts, the owner of A New Approach Financial Planning in Lakewood Ranch and Sarasota, can be reached at (941) 927-9590 or Tom@ANewApproachFP.com.