Many young people lack financial literacy and money management skills implying a need for educational programs to help young adult emerge a better adult hood to handle their financial affairs.
Almost a third of young adults were found to be “financially precarious” because they had poor financial literacy and lacked money management skills and income stability. Only 22 percent of the 18- to 24-year-olds in the study sample were deemed to be financially stable
Sinha and co-authors kelvin Tan and Min Zhan, both social work professors, studied the financial attributes and behavioral patterns of emerging adults. They were classified into groups: financially precarious, at risk, striving or stable.
These individuals were better at planning and managing their finances, had checking or savings accounts in mainstream banks and were against the use costly alternative financial services such as payday lenders. They also were more likely to be white males who were employed and college educated.
About 36 percent of the people were deemed to be “financially at risk” because they had experienced a significant, unexpected drop in income during the prior year. In the same way, some of them in the financially striving category, which composed 10 percent of the sample, struggled with money-management behaviors such as budgeting and credit card usage.
What differentiated people in the financially precarious and at-risk groups from their others was that they engaged in financial socialization, which the researchers defined as formal or informal learning about financial concepts and prudent money-management behaviors. Even people in the financially stable group were only confident about their financial literacy, “which clearly showed a need to invest more in strengthening the financial capabilities of children and youths. It is alarming that many young people are going into adulthood without adequate financial capabilities to ensure their future well-being and that of their children.”
Young adults should have an understanding of basic economic concepts such as interest rates and inflation, the use of credit cards, financial institutions and alternative financial services to guarantee a better future and prevent a high rate of poverty in your country.