How Many Miles is a 401(k)?
Comedian Chip Leighton is known for collecting hilariously uninformed texts between teens and their parents. One of the subject’s teens seem to have little practical knowledge about is money—how you accumulate it, how you invest it, and how you manage it. For example, a mother reported to Leighton that when she told her teenager that she'd registered for a 401(k) at work, the teen asked, “how far that is that in miles?”1
Of course, all of us only know what we've been taught or figured out on our own (usually with many mistakes). Older generations could laugh at our ignorance of European history, world geography, and how to repair a car. Today's young adults demonstrate an ignorance about financial matters because nobody has instructed them. It's no longer a required class in school and many parents have felt unqualified to teach their kids because of their own lack of knowledge.
Unfortunately, for many young people this void in practical knowledge has been filled with badly informed advice from social media. According to a study by MarketWatch, the average American scores 46% on a basic quiz about financial literacy, showcasing a critical gap in financial education. Only 29% of Americans in our survey reported taking a personal finance course in high school. 2
The effects of financial illiteracy have been devastating, with 18-year old college students saddling themselves with huge loans they will struggle for decades to pay off, and young adults (mostly men) who believe the stock market should be played like a video game.
Studies have shown that teens who do receive financial education show improved outcomes in just a few years. So, if you have children in your life who are in high school or college, encourage them to take at least one course in personal finance.
Also, share with them what you've learned along your own journey to financial health. You probably know a lot more than you realize.
Our Participant Success Center can answer your questions and point you toward trustworthy resources you can share with the young people in your life. No matter how much you know, there's always more to learn.
1. http://go.pardot.com/e/91522/ome-kids-know-about-money-html/96b5xp/2647398104/h/vsnsGnfcs7FW0t1poH_VmqHFu9HfBUHta3EuJv9iYpE
2. https://www.marketwatch.com/financial-guides/banking/financial-literacy-statistics/#:~:text=The%20average%20American%20scores%2046,with%20financial%20tools%20and%20products.
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