The Financial Future of Generation Z: Stability or Ruin?

$620 billion.  That is how much the United States (States and Federal) spent on education in 20171. That is around $12,000 per student enrolled in public school, and it’s even higher when you consider private schools and other educational systems. Despite this world-leading investment in our children’s education, we are not only failing to compete against much of the world in our core competencies; we are failing to give them critical and relevant training in basic ‘survival skills.’ There was a time when we looked at school systems to train our children in the core competencies (Math, Science, Reading, Writing, History) and the rest of life’s lessons were consumed within the household (Finances, Healthy Lifestyles, Religion, Politics, Relationships and what I would call survival tools). But (and there is always a but), the world has changed.

The family dynamic has changed; technology has changed; the degree to which we lean on our educational systems and educators has changed; communication systems have changed; access to data and information has changed.

The world has changed.

I find myself constantly reminding my employees as well as myself of a mantra: ‘evolve or die.’ It may sound dramatic, but it’s the truth. If we are to recognize these changes and the accompanying reality, we must also recognize that our ultimate goal of preparing our children for success should not change. So, what is the goal when educating our children? My mother, a former part-time professor at Columbia University, focused on early childhood education. She would tell me that the purpose of educating our youth is to “prepare them to be active and valuable contributors to society for their benefit, and benefit of the community at large.” To me, that seems an honorable and logical goal.

Before I allowed my daughter to drive her car, I taught her how to change the tire. And I made her change the tire. She may never have to change a tire, but in the event something were to happen, I want her to be prepared with this basic survival skill. If you could only impart your children with a limited amount of knowledge (that they’ll retain), how would you prioritize their education? We clearly have work to do regarding the core competencies, but I want to focus on life lessons, specifically financial literacy.

Why do our children spend hours learning about the roman empire, but little time on survival skills like balancing a checking account, establishing a budget, understanding how credit cards and loans work, learning about savings and retirement planning...the list goes on. I would wager (not a good financial wellness habit, I agree) that most of our children will more likely benefit from the latter over their lifetime. I don’t say this to take away from the value of historical lessons; more so, to emphasize the importance of our youth being able to efficiently operate in the world as it exists today, ensuring financial habits are both understood and motivated.

Exhibit A:

A basic financial literacy test was administered to high school students; the result was an average score of 48%. Even college students given the identical financial literacy test scored only 62%2.

Exhibit B:

94% of ALL Americans failed an 11-question financial literacy quiz administered by Financial Engines.3
Restated: only 6% of Americans failed a simple quiz related to basic financial questions.

These are scary results. Let’s set our children up for success so they fall into the 6%, with the hope that they’ll drive that average exponentially higher. A certain number of these children will benefit from the roman empire lesson, but I am confident that all of them will benefit from the development of their financial acumen.

Many financial wellness programs offer a version of ‘family sharing’ when it comes to educational resources. There are many age-appropriate courses tailored to children, and the offerings can range from grades K-12. The courses generally focus on core competencies in the financial arena: spending, saving, borrowing and planning. These focus areas are core to any holistic financial wellness program that enables behavioral change.

Through the family sharing plans, financial wellness participants can share financial education with their families. And it’s often at no cost to the participating adult. The financial wellness industry is expanding its reach to be all-encompassing; industry providers recognize the need to educate and develop our youth and are designing programs accordingly in an effort to build strong financial foundations.

The world has changed, and teachers are overwhelmed with their historical role coupled with our increasing reliance on them to teach ‘survival skills.’ We expect school systems to do the heavy lifting of life lessons; subject matter ranging from money, relationships, politics, healthy lifestyles and beyond. If we are going to ask the educational systems prepare our children to be active and valuable contributors to society, we should do our part to aid in their financial wellness education.

The resources are available. The technology is available. Now we, as responsible and educated adults, need to motivate our children and encourage engagement.

By 410 AD, the Roman Empire had all but split in two and the division between East and West was the preface to the collapse of the entire empire. If we are to prepare our children for an ever-changing future, we must recognize the need to unite the classic core competencies with the life lessons and survival skills. Even a basic education on the fundamentals of financial behaviors inclusive of spending, saving, borrowing and planning could have substantial impact on the future choices our children will make. Through financial wellness and available technology, they can have access to so much more than a basic education. It may very well be the difference between financial stability or ruin.