674. How Can We Improve Financial Literacy for Our Youth?

[00:00:00] Hey Family, you know one of the things that I sent is some of my early experiences particularly

[00:00:16] in my childhood and not too dissimilar from any of yours. I had for a while two parents

[00:00:20] that were together and they subsequently got divorced but I watched them work. You know

[00:00:26] my dad who was an insurance man literally he was one of those insurance men back in

[00:00:31] the day before everything was computerized. Had that green bar paper riding around the

[00:00:35] city streets of Philadelphia collecting premiums I'd go with them sometimes and this old green

[00:00:41] gremlin that was so ugly. My mom just hated that card but nevertheless watched him work

[00:00:47] and then I watched my mom be a legal assistant and after they got divorced I lived with

[00:00:53] her for a period of time. Him for a period of time came back live with her she held it

[00:00:57] down working two jobs so on and so forth but throughout all of that while watching them

[00:01:03] go through different phases of life I do not recall being taught about money and how

[00:01:10] to manage money. Now I will say one of the things I cherish and hold dear is two

[00:01:15] things that happen. One the idea of chores being associated with me receiving money

[00:01:21] so chores were definitely associated with me being receiving money so I had to take back

[00:01:24] my initial statement I was taught some things maybe it wasn't hey sit down and teach you

[00:01:28] about money but there were principles and still one so you must do something to get

[00:01:32] something in terms of money. And then two I remember a moment in my life when I was

[00:01:38] I don't know probably late teens I had gone through different phases of doing music

[00:01:43] DJing etc. And I wanted to get this keyboard and begin doing more music production and

[00:01:50] my mom said to me no no no I am not buying that keyboard for you. I've seen you dip in

[00:01:56] dip out of things have these seasons and so on and so forth you need to invest in

[00:02:01] yourself and so she went with me to the music store Zaps music store on Fifth

[00:02:05] Street in Philadelphia and she co-signed alone but I was responsible for the

[00:02:11] loan I was responsible for making the payment and we walked through how that

[00:02:15] was going to happen I had at 14 got this after school job initially was a

[00:02:19] summer job turned into an after-school job guy named Joe Jankowski was the owner

[00:02:24] shout out to Joe one of my favorite mentors and so okay so here's what you

[00:02:30] make here's what you'll have to take out of what you make for the loan or you

[00:02:33] want to do it so on and so forth and that instilled in me the idea of

[00:02:38] investing in oneself and creating the opportunities to invest in oneself and

[00:02:44] so I say all that to say man financial literacy for all of us is a journey that

[00:02:50] may start at different places start with different insights etc but it's a

[00:02:54] journey we have to take I mean it truly is a journey we have to take and so I

[00:02:59] want to talk about today some of the points around financial literacy in

[00:03:04] teaching our youth and let me open with this one financial literacy indeed is

[00:03:09] one of the most significant stressors for Americans just money how to get it how

[00:03:15] to keep it how to get more in the future listen to this statistic according to

[00:03:21] the first Republic Bank 340 million Americans carrying average debt of a

[00:03:29] hundred and four thousand dollars in debt across mortgages home equity lines

[00:03:32] student loans and credit cards 340 million Americans carrying average

[00:03:39] debt over a hundred thousand dollars now you may say well if that includes

[00:03:42] mortgages not a big deal listen family 340 million Americans that means many

[00:03:47] Americans who are retired past retirement age etc right in the idea used to be

[00:03:54] when you got a home you got it at an age you got that 30 year mortgage at a

[00:03:58] point where you would pay that off before you go into retirement so think

[00:04:01] about some of the places you go into now and some of the older folks you see

[00:04:05] working there I think sometimes we think they're doing that because they

[00:04:08] want to be in community they want to be out amongst people so on and so forth

[00:04:11] no a lot of those folks are doing that out of necessity to cover their debt

[00:04:18] okay to cover their debt point to bank rate reports that 48% of you as

[00:04:24] adults don't have enough money saved in an emergency fund now I know when I

[00:04:29] say emergency funds some of us may go to rolling our eyes well that's a luxury

[00:04:34] an emergency fund no it is not luxury I mean think about that you have a spare

[00:04:39] tire in your car why because a tire may pop lose air etc you have a jack in your

[00:04:47] car to jack up the car you have other things that may be in your car in my

[00:04:50] car my wife packs blankets because we've seen situations where you know

[00:04:56] there's a catastrophic event you're stuck on a highway somewhere for hours

[00:04:59] upon hours and it could be one of time you need a blanket other things like

[00:05:03] that so emergencies family are just that they happen and so you need an

[00:05:08] emergency cash fund it is not a luxury so the thing about this is one some of us

[00:05:13] no matter where we are in our age range still have some learning to do but the

[00:05:19] idea today I want to really express is let's pay it forward and start teaching

[00:05:23] some of our youth early financial management is a skill best for early as

[00:05:29] it can become an asset unto itself I mean just think about that think about the

[00:05:34] first time if you've learned this rule the rule of 72 the rule of if I invest my

[00:05:38] money into this account or this vehicle that interest rate number so let's say

[00:05:44] 10% divided into 72 that means seven years that's the pace at which that

[00:05:50] money will double and I remember learning this I forget it was in my teens

[00:05:54] and so it was like okay so I have $150 I okay I was gonna buy a pair of sneakers

[00:05:59] but you're telling me that if I invested into this account I'll have $300 in

[00:06:04] seven years and so many well seven year but yeah family the point is scaling

[00:06:09] your money having your money make money for you while we like to say why

[00:06:14] are you sleeping and so least having the knowledge you can make an informed

[00:06:19] decision and so don't want to be critical about how you use your money

[00:06:23] want you to have the education to use it wisely within formed decisions and

[00:06:30] let's do that for our youth the other thing is people with higher financial

[00:06:33] literacy tend to live within their means have sufficient emergency funds and

[00:06:39] claim to have at least one retirement account now go back to the point I

[00:06:44] said earlier of the 340 million Americans with over a hundred thousand

[00:06:48] dollars in debt and again that point with people we see that are look like

[00:06:53] they should be retired and live in their best life at this point but you

[00:06:57] see them in different places whether it's a large-scale restaurant fast food

[00:07:01] restaurant home depot you name it who are working again not because they

[00:07:06] want to be out in community they could do that hanging out with some friends

[00:07:09] walking the the the the park drive you know doing golf whatever they like to do

[00:07:17] pickball pickleball whatever they are working why because they have debt so

[00:07:22] family when I come back we're gonna talk about some of the big picture points that

[00:07:26] we need to stress with our youth relative to financial literacy let me give

[00:07:32] it a big picture five big things to think about right because it's about

[00:07:35] financial literacy is about understanding the basic concepts right you do

[00:07:40] not have to be warm buff it to be financially literate just understand

[00:07:46] some of the concepts and their five key concepts earning money how will you

[00:07:51] make it the various ways to make it spending money right how do you then

[00:07:56] let go of it save and invest so right so how will you take money now and

[00:08:01] save it and put it away as well as invest it into things that have high

[00:08:05] yields how will you borrow money almost all of us will need to borrow money

[00:08:10] okay and then how do you protect your money meaning making sure you have some

[00:08:15] for retirement etc and their list of topics underneath those five principles

[00:08:21] to consider right everything from opening a bank account some of us may

[00:08:25] consider that rudimentary so on and so forth but listen there's a large

[00:08:29] population of people that are quote-unquote unbanked if you think about

[00:08:33] this over a decade ago I recall Russell Simmons starting a campaign to

[00:08:38] reach unbanked people and help them become banked or semi banked there

[00:08:42] was a product that was developed in several financial institutions have

[00:08:46] developed these over the years to help people become banked a lot of

[00:08:50] people don't either understand how to do it have a distrust of the system

[00:08:54] not that those pointed distrust of fully unwarranted but nevertheless being

[00:08:59] banked is an entree to paying bills on time why is it important to pay your

[00:09:05] bills on time three creating and managing a budget for how credit works

[00:09:10] and how to improve your credit score you may not believe it's important

[00:09:13] your credit score is of importance five using debt responsibly

[00:09:20] well I have to use some debt but how do you use it responsibly six

[00:09:23] saving for retirement again how do you make sure you have the money you need to

[00:09:27] have in those golden years seven comparing financial products like credit

[00:09:31] cards or investments right so after you get to a certain level of let's call it

[00:09:35] being I don't even want to say astute just being informed now you need to

[00:09:39] choose the different products and then eight it's this well let me say that

[00:09:45] I'm sorry seven was was financial products like credit cards investments

[00:09:48] but the eighth point really is this is not an exhaustive list I've

[00:09:51] given you seven elements underneath the five topics earn spend save and invest

[00:09:58] borrow and protect and so now let's pivot to again my my central point of

[00:10:03] conversation young folks the 2023 financial literacy crisis in

[00:10:10] America report just think about the name of the report okay

[00:10:13] the financial literacy crisis in America report

[00:10:17] it found that 88 percent of US adults said high school did not leave them quote

[00:10:22] fully prepared for how to handle money in the real world

[00:10:26] end quote 72 percent said they would have been better off financially

[00:10:31] had they taken a personal finance class in high school

[00:10:35] fam 88 percent said they didn't have it 72 percent said I would have done

[00:10:40] better had you told it to me those are huge numbers family

[00:10:44] the lack of financial education leads to poor decision making

[00:10:48] financial stress insecurity and debt for the individual

[00:10:53] not to mention in our nation you may say I don't care about what happens to the

[00:10:57] nation oh you do you do when you understand the reverberating

[00:11:00] impacts of when it is not good for all of us it is truly

[00:11:04] not good for all of us lastly teaching students sound financial

[00:11:09] principles early on sets them up to create healthy habits around money

[00:11:14] management and ensures their stable future which we all

[00:11:18] want so listen when I come back I'm gonna talk further

[00:11:21] about some of these benefits and then how we need to put our arms around our

[00:11:26] youth as relates to financial literacy we need to share this with our youth the

[00:11:31] 2023 financial literacy crisis in America report found that 88

[00:11:36] percent of us adults said high school did not

[00:11:39] leave them fully prepared and 72 percent said I'd have done better

[00:11:42] had I taken some personal finance classes in high school

[00:11:45] so what are the benefits then what what are those people saying are the benefits

[00:11:49] listen one many benefits teachers as well as students

[00:11:53] learn lessons that they can directly apply to their lives

[00:11:57] programs can teach one how to make better financial decisions when you

[00:12:01] have more information and you know the choices

[00:12:05] available to you and you understand the potential results

[00:12:09] of said choices you can make better decisions too

[00:12:13] it promotes long-term financial health long term

[00:12:17] financial health let me say one more time long term

[00:12:21] financial health oftentimes we have enough information for the short-term

[00:12:25] decision the end-the-moment decision that this or that

[00:12:28] the sneaks or the shoes the restaurant uh sit down joint or the law or the

[00:12:33] other drive-through right and the cost associated different things

[00:12:36] there's a difference between those things and the

[00:12:39] in the moment or even I'll just say for the day a few hours a day a week

[00:12:43] versus long term benefits how does it affect me a decade from now

[00:12:49] how will this affect me two decades from now

[00:12:52] that shift in thinking that paradigm shift is huge

[00:12:57] three it instills sound debt principles sound debt principles so

[00:13:02] understanding the difference and what a loan looks like

[00:13:06] what that structure looks like of a personal loan at a bank for example at

[00:13:09] a let's just say a four or five percent interest rate

[00:13:13] the difference between mortgage and rent the difference between

[00:13:17] uh the personal loan in the credit card going from a five or six percent

[00:13:21] interest rate to an 18 to 21 plus interest rate depending on where your

[00:13:24] credit is all those things are sound debt

[00:13:28] principles and thinking about how much you want to borrow when you want to

[00:13:31] pay it back how much interest you're paying so how much money you're

[00:13:34] paying to borrow money all those things are important

[00:13:37] and then they have a positive ripple effect in all areas of society and i'll

[00:13:43] say what i said before a lot of times like i can't think about other people

[00:13:46] in society you have two family we are all in community

[00:13:51] there's no way getting away from that all in community

[00:13:54] when we do better in many cases boats rise and we want boats to rise we

[00:14:00] want all boats to rise to the extent they can

[00:14:03] and so what's the challenge you said well if that's the case and you've given me

[00:14:07] statistics 88 percent of people said i didn't have the training in school

[00:14:10] 72 of those say man a class would have made sense

[00:14:14] why is it not happening well there's a number of reasons right

[00:14:18] um their obstacles for the education system one

[00:14:22] instructors may not be well versed in financial literacy enough to teach it

[00:14:26] your average school teacher may not be well versed enough to teach it or

[00:14:30] don't believe they are and so they don't teach it

[00:14:33] two it's not stressed in becoming a part of the core curriculum in school you may

[00:14:39] say well why not good gravy in high school they

[00:14:42] have to be learning these things yeah it does make sense when you think about

[00:14:45] it but it's not happening three limited resources

[00:14:49] family just step back for a second think about how many teachers you've

[00:14:51] heard have bought personal items out of them

[00:14:55] i'm excuse me items for their class out of their personal funds

[00:14:58] not enough budget in the school so if that's happening at that level just for

[00:15:03] the core things and think about how many art programs and

[00:15:05] things have been pulled out of school if those things are not happening

[00:15:09] something like this is going to take time to get implemented if it is

[00:15:13] implemented at all so when i come back we're

[00:15:17] gonna now focus on what we do about it okay what can you do knowing

[00:15:21] knowing how important it is knowing that teachers and such probably want to

[00:15:24] do it but either fill in an effort don't have the resources etc

[00:15:28] what are we going to do to help our youths financial

[00:15:31] future so now what will you do for our youth family

[00:15:34] what will you do for our youth your youth the person that you care for the

[00:15:41] child in your home your nephew your niece the young child down the block

[00:15:46] you see who has potential but you go hmm man he may not be getting some

[00:15:49] of these basic things let's talk about it there's a

[00:15:52] couple tips you could do to get them started number one and i know

[00:15:56] this is going to be touchy but you can let them into your finances many

[00:16:01] kids learn best by doing so let them see how you budget

[00:16:05] your finances are you pay the bills are you save money

[00:16:09] for things how do you put the money aside for groceries food and other

[00:16:12] necessities i remember seeing people who used to put in a little envelopes

[00:16:16] marked for those different things envelope that said groceries and

[00:16:19] putting dollars into it envelope that said rent

[00:16:22] envelope this said the electric etc listen it does not matter how rudimentary

[00:16:27] or non-electronic or non-tech of your processes

[00:16:32] the fact is if you have a process to manage your finances you are ahead of

[00:16:38] the pack relative to many and so share that with your child

[00:16:43] share how you do it they get to learn the mechanics the logistic

[00:16:46] or what it takes to maintain that home that they get the chance to walk

[00:16:49] around in that is warm in the winter and potentially cool in the summer

[00:16:54] how does all that happen all the things that happen

[00:16:58] quote-unquote behind the scenes that puts food on the table

[00:17:01] how did well how does it get there where did the money come from

[00:17:05] where was the money stored how did you disperse it etc short all and again

[00:17:11] if you feel like you don't want to open up the full Monte so to speak

[00:17:15] pick a few elements pick the cable bill pick pick something but show them

[00:17:19] the process secondly have kids earn money with chores I shared early on

[00:17:25] that's one of the things I remember I had a set of chores to do and my lounge was

[00:17:29] not coming if I did not do those chores have kids earn money with chores it's a

[00:17:33] great way to teach them responsibility and the value

[00:17:36] of money is giving them chores and then paying them for the chores and by

[00:17:41] the way I'm a huge fan of teaching performance management

[00:17:46] early as well so you can even say it's ten dollars if you do your chores and you

[00:17:49] could I know ten dollars a week I'm no city kids listening like are you kidding

[00:17:53] me jig ten dollars whatever let's just use ten is around number I know it's more

[00:17:56] than that okay but let's say ten dollars is if you do it in an okay way

[00:18:02] but then when you find them doing something special

[00:18:04] doing their chores add a dollar to to it show them the value

[00:18:08] of what performance look like just like your performance is measured

[00:18:12] right how are you measured and whether you get a raise

[00:18:15] or a higher raise or lower raise based on how you perform

[00:18:19] you can instill that early as well fan it can make a big difference and help them

[00:18:23] walk into the workforce the right way um three

[00:18:27] you know banks and other organizations have

[00:18:30] financial programs for youth so google search personal financial literacy for

[00:18:35] youth see what you find get them involved

[00:18:38] but the biggest thing is to take some action

[00:18:41] now money is essential for feeding and keeping us closed

[00:18:45] sheltered and secure from now until our golden years give the youth that you

[00:18:52] care for that you love for a step up