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David Libby is president and CEO of Town & Country Federal Credit Union, one of Maine’s largest credit unions serving southern Maine.
In today’s fast-paced and increasingly complex world, financial literacy is more essential than ever. Yet, many young people enter adulthood without a solid understanding of personal finance. This lack of knowledge can lead to poor financial decisions, debt accumulation, and financial insecurity in the future. Teaching young people about personal finance early in life equips them with the skills necessary to make informed financial decisions, develop responsible spending habits, and secure long-term financial well-being. Financial education for youth is not just beneficial — it is essential for individual success and overall economic stability.
Though personal finance is a concept that should be highlighted to our children throughout the year, the month of April holds particular relevance as it is designated as “Youth Financial Literacy” Month. This designation provides an ideal segue way to begin and/or continue what should be an ongoing and, frankly, lifelong dialogue with the young people in our lives about personal finance and money management. Sharing knowledge and experience can go a long way in preparing a young person for the financial path ahead and help them navigate that journey more successfully.
A significant benefit of teaching personal finance at a young age is that it helps build healthy financial habits early in life. Just as children learn the importance of brushing their teeth or exercising to maintain physical health, it is essential they also learn how to manage their money responsibly. Understanding concepts like budgeting, saving, and distinguishing between needs and wants can help young people develop financial discipline.
For example, a child who is taught the importance of saving a portion of their allowance or birthday money will be more likely to practice saving as an adult. Without such education, young adults may struggle with impulse spending and lack the foresight needed to manage expenses effectively. Financial literacy provides them with the necessary tools to make wise spending and saving decisions, helping them avoid unnecessary debt and financial stress in the future.
One of the biggest challenges many young adults face is managing debt, particularly student loans and credit card debt. Many students take on significant student loan debt without fully understanding the long-term consequences.
A strong financial education helps young people understand the implications of borrowing money, including interest rates, loan repayment terms, and the impact of credit scores. When students learn about responsible borrowing, they are more likely to avoid unnecessary debt and make informed financial choices. For instance, a financially educated student might opt for a lower-cost college, apply for scholarships, or work part-time to reduce reliance on loans.
Understanding credit card interest rates and penalties also encourages responsible credit card usage, helping young adults avoid financial pitfalls.
Financial education not only teaches young people how to manage money but also encourages them to explore opportunities for financial growth, including entrepreneurship. Many successful entrepreneurs started businesses in their youth, often leveraging financial knowledge to turn ideas into profitable ventures. When young people understand how money works, they are more likely to develop innovative solutions and seize financial opportunities.
Given the importance of financial literacy, parents and other adults play a critical role in teaching young people about money management. By teaching children about saving, responsible spending, and the value of money, parents can reinforce positive financial habits at home. Simple activities such as opening a savings account, setting financial goals, or involving children in budgeting decisions can have a lasting impact on their financial literacy.
Equipping young people with financial knowledge empowers them to make sound financial decisions, avoid debt, build wealth, and contribute to a stronger economy. By fostering financial literacy from an early age, we prepare the next generation for financial success and long-term stability. After all, financial literacy is not just about money — it is about creating a secure and prosperous future for individuals and society alike.
