Younger people could likely be unprepared for financial instability and other money-related problems. The youth may know little about the early steps to build up their savings due to little exposure to financial literacy. Although, it is not entirely their fault since money management is barely taught in high schools.
Why youth accounts are needed?
So, it is up to the parents to help teach about building financial stability. Here are some reasons why youth accounts are needed.
Even with very little knowledge, the youth still has a growing fear of financial instability. An estimated 54% of teens in the United States say they are bothered by their possible future savings. Here are some of the reasons why.
- Increase in prices of necessities due to inflation.
- Student loans.
- Wanting to live independently in the future.
- Housing market prices.
- Uncertainty of career path
These are some of the many early problems younger generations face when achieving financial stability.
Investment Literacy And Behavior
A large section of the youth has poor money-managing skills that could prove detrimental in the long run. A study shows younger generations with little financial literacy have more consumer-based behaviors. These behaviors mean they will spend on things with very little future value. These small expenditures would still add up to a significant amount that could help with their future savings.
People with lower financial literacy also react slower to money-related problems. These people would prolong the complication than fix it, compared to people with higher financial literacy who create solutions quicker. A slower reaction to the problem could cause more obstacles to the person’s long-term financial goals. Investment literacy and money management help make things less complicated.
Poor money management behaviors should be addressed as they may cause more problems in the person’s life. Behaviors like procrastination and impulse buying are major symptoms of bad financial decision-making. However, the study also mentioned that good financial literacy education has a connection to better spending behaviors. It shows that it is never too late to be financially responsible.
Better Decision Making
Financial literacy could also help the youth understand and avoid bad financial activities. For example, not everybody can identify a scam at face value since many people are brought into it before they realize it. Pyramid schemes are portrayed as an easy way to get rich, bringing in many people with little financial literacy. The financially illiterate don’t understand that very few gain from it.
Young entrepreneurs are not exempted from poor financial decision-making. Without being educated about money management, businesses could fail due to increased expenditures with very little revenue. It is necessary to have a background of good spending behaviors to ensure the growth of a business. Monitoring money influx and outflow is important to ensure stability.
Taking The Right Steps
Opening a savings account as early as ten years old could help prepare for any financial problems in the long run. It would promote smarter financial decisions for the whole family, as more specific budgeting would be pushed. For example, student loans can be tackled before the teen enters college, alleviating financial stress on the family and the child’s future.
It would also help educate the younger generations about good and bad financial decisions. Spending plans could be taught to show the importance of having emergency funds than spending on unessential amenities. These accidents could destroy years of financial planning if people can’t pay off their large hospital debts.
You should start now and save with our youth accounts. Exposing the youth to good financial literacy could teach them the importance of insurance and investments. Insurance is a good backup plan for anyone as it may help in money problems or emergencies.
For example, health and car insurance could help pay off debts for car damage and medical bills. Long-term financial plans can help secure a more stable future for young adults.
An early youth savings account could also promote an increase in prioritizing retirement funds. As we age, our physical health starts being a problem for our working life. Bad health could lead to people being physically unhealthy to work, therefore stopping the person’s flow of income. It shows that saving as soon as possible could mean the difference between being stable and retiring in poverty.
Changing With The Economy
As the economy continues to change, people will need to adapt to it. The youth should understand that prices for necessities are high and might continue to rise. Therefore adapting to more frugal behaviors is needed, like cooking at home compared to eating out. These small changes in a person’s life could help ease the stress from economic changes.
Another way would be walking or taking public transportation when traveling short distances. A car is necessary for some people but is slowly becoming a privilege. Oil and gas prices are expected to rise, meaning people need more ways to cut costs and save money. The economy is unpredictable; therefore, people must anticipate the changes and act accordingly.
Having more than one source of income will help people adapt to possible financial problems. Working one job is no longer enough to sustain a person wanting to live independently. It is time to think of safety nets, like passive income, to ensure stability and growth. Thinking of having a side business or a second job could be the answer to increasing savings and creating security.
Securing Your Future
The youth should be informed about the financial obstacles they could encounter growing up. For example, student debt should be discussed to give them an idea of how it works and how to solve it. It will ease their stress and help them create priorities regarding spending. These are characteristics that are better developed early in life.
It is time to start educating the youth about financial literacy to combat poor monetary decisions. Start teaching them how to save and what smart investments are for the future. This way, they can have an early start that not everybody had.