One of the major financial challenges for Americans is saving money and staying out of debt: Average American household debt has increased by 11 percent annually in recent years, and topped $137,000 in 2016, according to research from NerdWallet. As American adults creep further into uncertain territory (57 million say they have no savings at all), the next generation faces more challenges in creating their own financial stability.
With so many households under strain, it’s no surprise that children and teenagers aren’t picking up positive financial habits at home. Unfortunately, most are not learning about finances at school either: Only 17 states require high school students to take a course in personal finance, according to the Council for Economic Education. In addition, less than 20 percent of teachers say they feel competent to teach personal finance topics, according to the National Endowment for Financial Education.
That lack of training in financial topics translates into another generation of Americans who is unprepared to handle money effectively. A recent survey showed that 65 percent of college students gave themselves a C, D or F on whether they can successfully manage their finances and money.
Financial Illiteracy Curtails Long-Term Goals
Entering the world without appropriate knowledge of managing finances sets up young people for failure. For instance, more than half of student loan holders (54 percent) did not try to figure out how much their future monthly payments would be before they opened their loans, and 53 percent said they would make a change if they could go through the process of taking out loans all over again, according to research from the Global Financial Literacy Excellence Center.
Many of those students with college debt end up dropping out before they even complete their degree (almost 4 million students with student loans dropped out during 2015 and 2016). Without the degree in hand, they may be unable to find well-paying jobs to pay off those loans. And even if they complete their degrees, these students begin their careers in the hole financially—often without the knowledge and skills to budget properly, save money, pay off their debts and move forward.
Financial illiteracy hurts not only youth, but the whole community. A lack of financial knowledge also prevents people from preparing for long-term expenses including healthcare and retirement, which can lead to dependence on government and society.
High Schools Need Help
Students need to develop financial knowledge while in high school. Waiting until college or later may be too late—many college students have already taken on student loan debt and credit card debt within their first year or two of college. In 2009, the average college senior carried credit card debt of more than $4,000, and 75 percent of college students with credit cards were unaware of late payment charges, according to a study published in the International Journal of Business and Social Science.
A relatively small number of states require high school students to take personal finance courses, but any high school can choose to provide important financial education. While many teachers may agree that it’s important, they report that they don’t feel adequately prepared to teach it. In fact, 92 percent of K-12 educators believe financial education should be taught in schools, but only 12 percent do so, according to a PwC study.
For those schools and teachers who want to provide much-needed financial education for their students, the new Fifth Third Finance Academy is prepared to fill the gap. This new program, intended for high school students in our 10-state footprint, aims to reach 150,000 students in its first full year.
Finance Academy will offer two web-based courses, Financial Literacy and Venture. The financial literacy course covers topics like investing basics and common financial accounts in an interesting, relatable format. The Venture course will help build and empower the next generation of business owners and entrepreneurs by guiding them through the creation of a business plan—from idea generation to taking a business to market to sustainable business practices for growth.
“Fifth Third is committed to growing the financial knowledge of students so that they can successfully manage their lives,” said Brian Lamb, executive vice president, Fifth Third Bancorp. “As high school students are entering the life stage in which they’re making financial decisions, it’s important that we play a role in that. This is part of who we are. It’s a part of being a Fifth Third better. And it is exactly what will make a long-lasting, positive difference in the communities we serve.”