Start financial literacy at an early age

Although an essential part of adulthood, financial education is not taught in depth either at school or at home. And everything we can learn at home about finances usually lacks precision and adequate information.

January 13, 2022, 1:00 p.m.

Last modification: January 13, 2022, 1:03 p.m.

Financial literacy is not a superpower bestowed on transitioning young adults when the clock strikes 12 on their 18th birthday. Photo: Noor A Alam

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Financial literacy is not a superpower bestowed on transitioning young adults when the clock strikes 12 on their 18th birthday. Photo: Noor A Alam

Growing up, anything related to money seemed like something only adults were supposed to deal with. Then, in the blink of an eye, you are that adult who is now burdened with bills, mortgages, rent, taxes, and all the other things that bring adult nightmares.

The jolt of being pushed into a state of heightened responsibility and expectation causes young adults to stumble through much of their early years. Unfortunately, along with other necessary life skills, financial literacy isn’t a superpower that’s gifted to young adults in transition when the clock strikes 12 on their 18th birthday.

The world of finance is constantly changing and to keep up with all the new trends, the basics of financial literacy must be learned and perfected over time.

So why not start early?

What is Financial Literacy?

Being financially literate implies that an individual has an adequate understanding of a few basic financial areas:

  • Know how to set a budget and stick to it

  • Set long-term financial goals

  • The bill payment process

  • How to take out loans

  • Quick ways to pay off debt

  • Create passive income channels

  • Credit cards, debit cards and credit scores

  • When, where and how to invest

As mentioned earlier, you don’t acquire all this knowledge overnight. Although a crucial part of adulthood, financial education is not taught in depth in schools, and the knowledge acquired at home cannot guarantee complete accuracy, techniques progress and information.

Benefits of Financial Literacy

By starting at an early age, adults are able to ensure that they are properly equipped with sufficient knowledge to navigate the transition into adulthood. Here are some of the notable benefits:

  • Teaches patience

  • Teaches how to handle difficult financial situations

  • Encourages early savings habits

  • Teaches the value of money and hard work

  • Makes you more aware of expenses

  • Enables individuals to contribute positively to the economy

  • Enables an individual to make informed decisions to plan their future

  • Improves traits such as self-control, self-confidence and independence

  • Opens multiple sources of income and allows you to be more adventurous

  • Helps individuals identify fraudulent behavior faster

10 financial tips for young adults

  • Start early and progress: The key is to start early. Rather than waiting to figure things out the first day at work, do a little research the night before. This way you won’t feel like a fish out of water. Start by saving some of your monthly allowance, the money you get from household chores and part-time jobs.
  • Differentiate wants and needs: Unfortunately, the list of “wants” is endless and can easily lead to unnecessary spending habits. It’s best to set your priorities early on and separate expenses based on wants and needs. Such awareness of splurges can lead to better spending habits down the line.
  • Read books, magazines and online publications: To learn about a topic in detail, it’s always best to go back to the most accurate and peer-reviewed sources. With today’s advanced technology, the world of finance and the knowledge surrounding it are just a few clicks away. Find a reliable source and try to absorb as much information as possible. The best part about the internet is that you have access to all the knowledge you need and you won’t even have to break the bank to get it.
  • Watch YouTube videos: There are many channels available on YouTube that provide financial knowledge for those who wish to learn. Whether it’s hack videos, videos on different types of investments, how the stock market works, or even money-saving tips, you’re sure to find a plethora of videos available to you.
  • Listen to podcasts: Whether you’re a student on your way to school or working out at the gym, you can always tune into a podcast and have it playing in the background while doing your task. Podcasts are usually hosted by people who are knowledgeable about the topic they are discussing and often bring in qualified guests who also have experience in the same field.
  • Take a financial literacy course: With websites such as Coursera and edX, college-level courses are made available to everyone at a very affordable price..
  • Use financial management tools: If you’re having trouble knowing where your money is going and need help managing it, I have good news for you. There are many money management tools/apps available online that can help you do just that. Apps like PlanGuru and Expensify help with budgeting and expense tracking.
  • Learn about taxes: This is a given. Learn about taxes. How to make them and all the background details. The earlier you learn, the smoother the transition to adulthood will be.
  • Create an emergency fund: One of the biggest benefits of saving is that in case of an emergency, you stay prepared. Whether it’s a medical, educational, or family emergency, it’s always best to have some cash on hand for scenarios like these.
  • Learn about investments: Once you’ve saved enough for your emergency fund and have a few extra dollars, put that money to good use. People are often encouraged to save until they have a sufficient surplus in the bank. However, it is always better to use these unused funds to invest and produce a return. Investments can be tricky, therefore, it is best to step in with the right knowledge or the advice of a trusted person who has sufficient experience.

Do yourself a favor and pursue financial literacy from an early age before it becomes a major obstacle. At best, you become a master at managing your finances. Worst-case scenario, well, actually, there isn’t.

Sarah J. Greer