In an ever-evolving financial environment, financial education should be treated as a fundamental aspect of K-12 education for students in Maryland and beyond. Investment opportunities, wealth management practices, and banking as a whole continue to change and evolve with technology, helping students develop financial literacy and face risks that affect not only their personal finances but the economy. is more important than ever. whole.
In 2021, Americans reported losing an average of $1,389 due to lack of personal finance knowledge. By the end of May 2022, U.S. student loan debt totaled $1.762 trillion. As of Q1 2022, total mortgage debt was $11.18 trillion. US credit card debt hit $841 billion in the first three months of 2022.
A study by the Federal Reserve Bank of New York found that financial education programs have a significant impact on young people’s ability to make financial decisions. Lack of education.
When individuals lack the tools and knowledge to understand financial markets, they are much more likely to make decisions related to money management, debt, investments, and other financial aspects. Moreover, it can quickly become a generational issue. If individuals are financially undereducated, it becomes much more difficult for them to teach their children conventional financial practices.
That is why early financial education is essential to break this dangerous vicious circle. Effective financial education programs include the basics of savings accounts and savings accounts, the definition and importance of interest, what overdraft fees are and how to avoid them, the importance of your credit score, and the process of getting a mortgage. Includes topics such as more. Early education can mean the difference between drowning in debt or enjoying financial health and stability.
Some students may get a financial education while in college, but those who have to take out student loans or who are not in a traditional college program will have to pay before they are faced with an important financial decision. Wealth management is important for people from all walks of life and starting financial education before high school can level the playing field.
If done effectively, early financial education can have a significant impact on the larger community as well. Those who practice healthy economic habits are likely to have greater food security, the ability to donate more to charity, and the ability to contribute more purchasing power to the economy. It can drive positive economic change in society and beyond.
In assessing the value of school-mandated financial education, legislators should consider not only the negative consequences of lack of financial knowledge, but also the impact that educated and economically competent consumers have on local, regional, and even We also need to consider how it will benefit the country’s economy.
Legislating core causes of national problems, such as rising debt, can lead to far more effective long-term solutions than continually mitigating negative consequences. When financial education is treated as basic education, everyone wins.
Kevin B. Kashen is President of the Maryland Bankers Association and President and CEO of Queenstown Bank, Maryland.