Financial literacy is essential for success.
A version of this article originally appeared on our US site, Fool.com.
Even if you take your knowledge of investments and personal finance for granted, a lack of financial savvy threatens to hold millions of people back for the rest of their lives. And the children in your life could end up among them -- unless you start sharing your money knowledge with them. As this year's Financial Literacy Month comes to a close, it's important to look at how you can make a difference in making today's youths more fit to face the financial problems that abound right now.
The huge effect of financial illiteracy
Even among adults, few of us do everything possible to manage our money as well as we could. A quick look at the 2012 Consumer Financial Literacy Survey (link opens PDF file) reveals some alarming facts:
One-third of adults don't pay all their bills on time.
Almost 40% carry credit card balances from month to month, in most cases incurring sizable finance charges.
Fewer than half of adults use a budget, and more than one in five don't have any firm idea on how much they spend for basic items like food and shelter as well as more discretionary purchases like entertainment.
Most adults learned about personal finance from parents or other family members, yet 80% of survey respondents say they could use outside advice from financial professionals.
That last point illustrates the importance of learning about financial issues as early as possible. Like it or not, children and young adults face financial challenges at early ages, and they need the tools to stand up to those challenges and avoid the pitfalls that so many people fall into.
What you can do
Teaching about financial literacy early on can make a huge difference. Early lessons about what money is and how the choices we make to save or spend money affect what we can do in the future can give children a solid foundation in putting their financial experiences in context. Later on, details about earning money at a job, understanding advertising, and choosing payment methods become increasingly important as teens move toward greater levels of financial autonomy. And by the time school leavers are ready to move on, knowing about taxes, budgeting and investing can help them through young adulthood and beyond.
Don't give up
A long recession and sluggish recovery have made many people bitter and hopeless about money. But it's never too late to provide more knowledge to those who so desperately need it. Supporting financial literacy is the most valuable gift you can give to younger generations, and the effect it will have will last a lifetime.
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