Financial Literacy Terms Explained for Today’s Youth

A recent study by the National Association of State Boards of Education indicated that most members of the American workforce currently are not participating in their companies’ 401(k) plans to support comfortable retirement. As a result of this regrettable development, a whole generation of adults is likely to be unable to retire when they reach 65. But this situation could be avoided if young people today were to receive practical education about effective money management. If they learned financial literacy terms in an engaging and motivating format, they would leave home equipped with adequate knowledge and skill to face the real world.

Giving teens and young adults the answers to their financial literacy questions can make all the difference in whether they are prepared to handle the inevitable challenges they’ll face during the course of adulthood. Youth need a program that honestly teaches them how to become financially successful, as opposed to boring theoretical discussions and books.

Here are some essential financial literacy topics that will really drive the lessons home and engage the students in the practical education process:

• Financial goal-setting
• How to get one’s “dream job”
• Budgeting
• Setting up appropriate bank accounts
• Education and skill development
• Insurance
• Basics of investing
• Entrepreneurship
• Long-term planning

Obtaining financial literacy information about these real-world topics will give children a head start toward financial success. When kids participate in activities that demonstrate how money works in a practical sense, the lessons take on personal meaning and are more likely to be retained and translated into good money habits that ensure future well-being and success. That’s what financial literacy is all about—getting the skills, knowledge, and confidence to be able to take effective action toward a secure future.