Lack of Education Linked to Record Levels of Debt
ConsolidatedCredit.org Advises Young Adults to Embrace Financial Education
FT LAUDERDALE, Fla.-With an average of $45,000 in overall debt, young Americans are facing one of the toughest financial situations in history. High unemployment rates have forced millions to depend on credit cards or on parents’ financial help.
Although most individuals blame current economic conditions for debt among youths, the lack of financial education is a pivotal reason behind financial instability and money problems.
The Treasury Department and the Department of Education have measured financial literacy in high schools across the country for the last three years finding that students scored an average of 69 percent in financial education tests.
The experts at Consolidated Credit believe this score is the result of poor financial education in schools and parents failing to teach their children about money from an early age. Most parents don’t teach children the value of money. Often young adults end up learning about finances when they are overwhelmed by debt.
As Federal Reserve Chairman Ben S. Bernanke said in remarks prepared for a town hall meeting with teachers, financial education is not only important for individuals, but for the country’s economy. “Consumers who can make informed decisions about financial products and services not only serve their own best interests, but, collectively, they also help promote broader economic stability.”
Consolidated Credit advises individuals to manage their finances responsibly and seek help when necessary.
Tips for a better financial footing:
Break the cycle of debt: It’s important that individuals prevent their children from having the same financial problems they had. Parents should encourage their children to only apply for a credit card once they understand basic finances. Once children obtain their first credit card, parents should keep a close eye on limit increases. Just because the card has a $1,000 limit does not mean that it should be spent. With a limit that high, it could easily be increased to $2,000 or $3,000 within a six month period.
It”s never too late to learn: In an ideal world young adults would know how to budget and administer their money. Unfortunately, many young adults start college without having any financial knowledge. People need to keep in mind that it’s never too late to acquire new skills. College students can take economics or finances and read about financial education at the learning section of ConsolidatedCredit.org.
Monitor credit card reports: When young adults gain a good understanding of how credit works, they should also check their credit reports. Many people fail to monitor their credit files and don”t know what type of information is included in their reports. Individuals who learn and care about their credit early are more likely to keep up with this wise practice in the future.
Seek help: In some cases individuals need guidance to solve their economic problems. Budgeting and paying off debt is not an easy process for individuals who have high amounts of debt or who never learned about money management. Seeking professional guidance may be the key for individuals to eliminate debt and improve their finances in the future. Visit ConsolidatedCredit.org to get a free debt analysis.