The world is constantly changing and will leave people behind. That is why it is important that disadvantaged youth are prepared with the necessary life skills so that they are competitive and are able to excel in a complex society. According to the Organization for Economic Cooperation and Development (OECD), young people will encounter more financial risks and will be challenged with more sophisticated financialproducts than previous generations. This increased sophistication requires a need to understand personal finances, investment services, and the financial market at an even younger age.
By teaching youth earlier, we are developing a financial literacy culture, which can secure their future and reduce the wealth gaps. Research on financial literacy indicates that it is evident that the rate of global market development is much higher and faster than many youth’s current knowledge of the financial markets. Because of this lack of understanding, youth are unable to respond appropriately to such high paced changes such as the development of virtual currency. Furthermore, this failure to have youth’sfinancial skills matched with the rate of global market development creates the necessity for them to acquire and use financial knowledge like maintaining good credit, sticking to a weekly or monthly budget and regularly saving money for future expenses.
So what exactly are we talking about with regards to financial education? OECD defines the term as ‘’...the teaching of financial knowledge, understanding, skills, behaviors, attitudes and values which will enable the learner to make savvy and effective financial decisions in their daily life...’’. As you apply financial education to your daily life, you become financial literate.
One way to build financial competence, disadvantaged youth need to be exposed to the many financial concepts in theoretical and practical ways. Understanding what behaviors constitute financial discipline (e.g. budgeting, saving, and broadly speaking investing), will allow young people to understand the impact of decision making on financial wealth and how to effectively navigate the everchanging landscape.
There is no better way to help secure disadvantaged youth’s financial health than with the inclusion of financial education in school curriculums and after school programs. Doing so will plant seeds for youth to apply what they learn in their daily lives. Incorporating financial education into the school curriculum is recognized as one of the most efficient ways to reach a whole generation on a broad scale and this can start at the middle grade level.
Why focus on disadvantaged youth? Simply put, to decrease the wealth gap between African American and whites. For example, African Americans are twice as likely to have zero or negative worth than whites. In addition, in 2010, the net worth for African American families was $4,900 compared to $97,000 for Whites. Youth have access to, and are being offered financial services at earlier ages (through personal pocket money, mobile phones, bank accounts, or even credit cards). Yet, most recent research surveys show disturbing trends of low levels of youth financial literacy and, in many cases, considerably lower levels than the older generations. This is a wakeup call to support teaching disadvantaged youth financial education sooner rather than later.
Wealth distribution among families will continue to decline as we live in a new millennium where economic instability from more frequent economic recessions, inflation, and other financial issues continue to persist. The effects of these financial stressors for African Americans are severe. Increasing financial literacy –starting with our youth – will help to manage and protect families from the harsh effects and create wealth for families and generations to come.
Black WallStreeter Consultation Services now offers a financial literacy program for middle and high school students to address the wealth gap crisis. The program is titled “Junior WallStreeters: Empowering Youth with Financial Wellness.” The ten-lesson curriculum promotes lifelong financial awareness and discipline at an early age. In addition to topics like banking basics and borrowing, the program goes beyond othersby exploring a community approach to wealth building through the use of investment clubs. The goal of the program is to teach the financial knowledge needed to reduce the wealth gap for future generations.