coins in article about financial literacy
Who wouldn't want tips on stretching their dollar (or coins)? (Image via Pixabay)

Why Financial Literacy Should Be A Prerequisite for a High School Diploma

Money’s getting tight out there for everybody.

College x
coins in article about financial literacy
Who wouldn't want tips on stretching their dollar (or coins)? (Image via Pixabay)

Money’s getting tight out there for everybody.

All across the country, millions of young people are struggling with unprecedented amounts of debt. This problem has been getting progressively worse over the years and does not show any signs of abating. Young people from all walks of life have been left increasingly disenfranchised.

This has led to an increasing sense of hopelessness amongst the younger generation and the rise of a culture of nihilism. Millennials are increasingly checking out of society and are participating in their community far less often than their older counterparts.

The biggest economic issue facing many millennials is that of rapidly increasing student loan debt. Indeed, student loan debt surpassed total outstanding credit card debt just a few years ago, and the gap has continued to widen. In fact, this amount is increasing so rapidly that an increasing proportion of student loans are past due.

With the pace at which this debt burden is increasing, more and more millennials will not be able to fully participate in the economy. They will not be able to purchase their first home, let alone get married and start a family, for many years to come, simply because paying off their student loans takes up so much of their disposable income.

Indeed, when you look at MoneyUnder30’s expose on the student debt crisis, you might be forgiven for being disheartened yourself. However, this should not be the attitude we have in dealing with this crisis. We must be solution-oriented instead of simply dwelling on our problems all the time.

Learning About Money While You Are Still in School

One problem with student loan debt has been the willingness of young people to accumulate it in order to further their studies. Students readily sign their names onto mountains of debt, without fully understanding and appreciating the gravity of the situation they are putting themselves in.

Students go through college blissfully unaware that their pile of debt grows larger every month, and when they graduate many are shocked by how much their monthly payments are — many times they are just overwhelmed by it.

But had these teenagers been introduced to personal finance from a younger age at home or at school, many of them might not have been so financially cavalier. Unfortunately, not all parents are that savvy with their own finances to teach their kids about it. This is why many have recommended making personal finance a mandatory class for every high schooler to take. Unfortunately, only 17 states require students to take a personal finance course.

They normally justify making it mandatory by citing the benefits increased financial literacy will have on society. Increased financial literacy, they argue, will have such positive reverberating effects on our economy and our society that it makes sense to put every kid through it.

Benefits of Mass Financial Literacy

Mass financial literacy carries with it many benefits. One of them is reduced levels of debt. If young people understood the nature of taking on debt of any sort, they would certainly not take on nearly as much debt as they already have.

Reducing debt levels will have a corresponding increase in the level of liquidity throughout the entire economy. This is because less capital would be locked up in consumer debt, and it will therefore be able to be deployed elsewhere and at lower interest rates.

The lower interest rates, a result of decreased demand for debt, reduces pressure on other parties looking to take on debt, such as businesses looking to expand their operations. Because the economic pie is finite and fixed at some point, students reducing the amount of debt they take on will undoubtedly produce spillover effects that will benefit the rest of the economy.

On the social and psychological front, increased financial literacy can also bring about quite a lot of benefits. If your debt burden is lower, you will most likely feel less stressed and less anxious about your circumstances than otherwise. This will do wonders to your overall psychological well-being.

Because you have more of a financial cushion than otherwise, you not only have more wiggle room in the event of a financial emergency, but simply knowing that you do will give you a massive peace of mind. You will also feel more upbeat about life and be a lot less likely to give in to the nihilistic culture developed by people who were probably not as financially literate as you.

Not only will you feel better, but those around you will as well. Because you feel more positively about your life, others around you will also feel that positivity, and a virtuous cycle will start to feed on itself.

Know More About Money to Have More Money

In this instance, it literally pays to know more about personal finances, in particular the seriousness of taking on large amounts of debt. The truth is that young people are already overburdened with financial obligations to the point where they are forced to delay many of life’s natural milestones.

Unfortunately for a lot of the young people, the die has already been cast. Although we might not be able to help as many millennials as we might want to, what we can do is influence the decisions of future generations going forward. From Generation Z and beyond, financial literacy should become a top priority, so that they do not end up digging themselves into an even bigger hole.

After all, knowing more about money is usually a good predictor for having more money at your disposal.

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