My previous posts on this blog have focused on the importance of teaching children about money management from a very young age (three years old, to be exact – find out why here). Something I haven’t really touched on yet, though, is the fact that most adults, both here in the US and around the world, have never received a financial education like the one I’ve outlined, and are thus financially illiterate themselves. For proof, just look at the US subprime mortgage crisis, which likely would not have happened if more people had known how to manage their money responsibly, or how to determine if a potential investment had integrity before they signed their life savings away on the dotted line.
The National Financial Educators Council (NFEC), an important organization that I’ve mentioned before on this website, has created a National Financial Literacy Test to find out just how financially illiterate each generation of Americans is in 2016. The test was originally designed for 15-18 year olds, but it has been administered to US residents of all ages, and quite frankly, the results are troubling, to say the least. This is mostly because the data shows no marked difference between the financial literacy of older Americans and that of our school-aged children, which shows that we are still not making enough of a concerted effort to teach our children about finance. We can see this quite clearly when we compare the average test scores of 10-14 year olds with the average scores of 25- 35 year olds, 36-50 year olds, and 50+ year olds. The average 10-14 year old scores a 54% on the NFEC Financial Literacy test; this is unsurprising, though disheartening, because this age demographic has yet to worry about their own personal finances the way they will when they get a few years older. Still, the average 25-35 year old only scores a 72% on the test, less than twenty percentage points higher than their younger counterparts – and the results aren’t much better in older Americans. Amongst 36-50 year olds, the average score is 73%, and in 50+ year olds, who perform the best on the test of any age group, the average score is still only a 77%. I’ll remind you again that this test was created for 15-18 year olds – scary, isn’t it?
This is why I was so excited to hear about Visa’s new Global Financial Education Initiative for Olympic athletes, which they’re debuting at this year’s Olympic Games in Rio. According to an August 4th press release, “The new program, Practical Money Skills for Athletes, will utilize Visa’s award-winning financial education program and curriculum focused on key personal finance topics including financial planning and decision making, goal-setting, budgeting and saving, understanding banking services, and basic money management. Financial education workshops for athletes will initially be available in English, French, Portuguese, and Simplified Chinese, and will feature presentations, skill-building activities and multi-media components.” What great news – and what a great idea for a program!
I can already think of so many different and valuable ways that an initiative like this one could be expanded on and adapted to teach people of all ages how to manage their money. I hope that this Visa program represents the start of a global push for financial literacy – but in the meantime, not to fear: I’ll still be here, posting about different ways that you can take your financial education (and that of your children) into your own hands.