HOW confident are you about your financial future? A recent report detailing the State of America’s Financial Education (SAFE) shows two-thirds of young adults and recent graduates are optimistic about their financial outlook despite the country’s economic difficulties and their present state of financial readiness.
The report, conducted by NFO World Group, examined financial literacy, perceptions, attitudes and actions among young adults aged 18-29. Nearly 60 percent of survey participants expect to be financially comfortable in five years, as opposed to 15 percent who feel that way now. Notably, only one percent expects to be struggling financially in five years.
Nearly 70 percent of those surveyed are confident in their ability to plan for their financial future. Many young adults have taken the first steps toward achieving these goals through sound money management skills. Over 60 percent of participants say they save money on a regular basis and try to follow a budget. And over three-fourths had either a savings or checking account.
Yet the need for financial literacy remains. Less than one-quarter (24 percent) claim to have a good understanding of how to invest in the stock market or mutual funds, and only one-third (33 percent) feel comfortable taking financial risks if there is a possibility of gain. A majority of recent graduates know little or nothing about home mortgages or IRAs. Less than one-half of young adults pay off their credit card every month. And only 43 percent have established a "rainy day fund" for emergencies.
The survey suggests that while many young adults focus on financial independence, budgeting and saving for major purchases and meeting current or short-term needs remains a priority over planning for the long term.
There is a fundamental need for financial education in our homes and schools. The survey suggests the largest resource for financial advice and guidance for this age group is parents (48 percent), while the Internet is the next most frequented source (16 percent). Only one percent of young adults seek financial advice and guidance from schools or colleges.
As parents and mentors, there is more we can do to help promote financial literacy. Basic money management fundamentals and the principle of consistently contributing to savings and investments early in life are valuable lessons we can pass along to our children.
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( Published on February 28, 2009 in Asian Journal Los Angeles p. C7 )
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