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Money Management

Michael Joyce column: Prioritize financial lessons for young people

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Among the most significant milestones in any young person’s life is high school graduation. As schools throughout central Virginia hold commencement ceremonies for the Class of 2021, it’s a good time to revisit an important life lesson that many students still are missing: financial education.

Recent research indicates that basic financial literacy is lacking among young people in the United States. A study from the National Center for Education Statistics found that 1 in 5 American 15-year-olds doesn’t understand basic financial terms and concepts. Another report found that only half of adults ages 25 to 34 in this country could pass a financial literacy quiz.

Fortunately, Virginia does have a high school graduation requirement that all students must complete a one-credit course in economics and personal finance. It’s a good start, but there’s still much more to do.

Why is financial education so important for students?

It serves as the foundation for those early money decisions that could impact their lives for years to come. A solid understanding of financial skills is crucial to positive outcomes later in a young person’s life. Research backs up this claim. A 2020 survey from the Council for Economic Education concluded that students who are required to learn financial literacy make better financial decisions across multiple and important money scenarios.

Financial literacy means that a young person understands basic techniques for managing money, comprehends financial terms to make informed decisions and develops good financial habits.

Specifically, financial education should cover common money management topics such as interest, saving strategies, inflation, debit vs. credit, budgeting, debt management, financial risk, and avoiding and recovering from financial mistakes. A basic understanding of investing, including stocks and bonds, is valuable as well.

This focus on investing should be an even higher priority given the number of young people who are following Reddit and social-media fueled stock tips for companies like GameStop, AMC and others. Cryptocurrency mania runs rampant online as well. It’s easier than ever for young people to purchase stocks or invest in cryptocurrencies. They’re susceptible to getting caught in a craze that could result in serious financial losses. Many of these investing and stock apps geared toward younger adults feel like a game, but they involve real money. Without a strong knowledge base, some will be surprised when they lose their money or even owe more if they borrow to make the initial investment.

Virginia schools should add additional courses or enhance the current required curriculum related to money management and financial planning. The current coursework should be updated to address recent phenomena, particularly around low-cost and no-cost investing as well as crowdsourced investment tips.

To truly be impactful, though, financial lessons can’t be relegated to school alone. Adults must get more active in the financial education of the children in their lives. Parents, grandparents, aunts, uncles or even neighbors can help young people better prepare for their financial future.

Many adults avoid talking about money with their kids. Yes, these conversations can be difficult and awkward, but exposing young people to basic financial management will yield life skills they desperately need.

Adults would be wise to start with three areas. First, help young people open a savings or checking account at a local bank or credit union. That first account is an incredible teaching opportunity to talk about savings, interest and more. Second, create a budget together. Make the budget relevant for them by focusing on clothes, groceries or spending money. Work together to update the budget and track expenses weekly or monthly. Third, if you don’t have a 529 savings account, open one. Use this account to save for college and to discuss investing with kids.

These areas especially are relevant during the summer months because many young people have summer jobs. Adults can work with them on how to save their money and properly budget. Additionally, with young people out of school for the summer, adults can take more time to discuss financial lessons. For example, teach young people about budgeting by taking them to the grocery store with a budget in hand. They can help make decisions about what to purchase with that budget.

We’re all responsible for the financial education of the young people in our lives. This summer, commit yourself to helping young people gain valuable skills that will impact them throughout their lives.

Michael Joyce is president of Agili, a financial planning and investment management firm in Richmond. He is a former chair of the National Association of Personal Financial Advisors (NAPFA) and currently serves as president of the Board of Directors of the NAPFA Consumer Education Foundation. Contact him at:


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