Family, friends and life experience serve as money teachers
Despite unprecedented access to financial literacy materials online and a plethora of budgeting and money apps, more than half of today’s high school and college graduates barely pass personal finance, according to a study for Ally Bank. The study shows that 53% of 18- to 24-year-olds rate their knowledge of personal finance a C or lower.
The results show adults 18-24 rate their knowledge of personal finance much lower than adults in general, and only 1 in 10 give themselves an A.
Even with a bevy of ratings, reviews, and articles detailing a variety of personal financial tips, those 18-24 are twice as likely as older adults to learn from friends or family when it comes to personal finance. In fact, 18- to 24-year-olds are twice as likely to ask friends than use an online resource to learn more about personal finance.
But learning in an academic setting is trending up. The study indicates that more recent high school graduates are three times more likely to learn about personal finance during high school than older adults (23% to 7%). This may be driven by the fact that 60% of adults feel that personal finance should be taught in high school.
However, more than half (54%) say they would like to learn how to manage their finances better. To help fill that need for more formal financial education, Ally developed Wallet Wise courses that provide tools and information to help people young and old reach their financial goals.
Ally also asked those who have celebrated their 10-year college reunion what advice they would give their college self. Avoiding student loans was high on the list of many of the respondents, as was understanding how best to use credit cards.
Other tips alums offered included:
- Set and stick to a budget;
- Pay extra on debts like car loans or mortgages;
- Save early as compounding interest pays off in the long run.
Other pitfalls those just starting out on their own experience is managing their money. The study also finds that those 18-24 are less likely to pay bills on time compared to all adults and just 1 out of 4 check their credit score regularly despite regulations that entitle them to one free credit report annually from each of the credit bureaus. Finally, just one-third of 18- to 24-year-olds have emergency savings compared to almost half of all other adults.
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