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The Importance of Financial Literacy

By Nadia Dupuis

Edited by Ms. Barry

An event every LHS student experiences before graduating is the Financial Literacy Reality Fair. Occurring in late May, students are given a salary and must make a series of financial decisions, attempting to make smart choices. At the end, students learn whether they spent all their money. But why is Financial literacy important anyway? Do teenagers really need to start thinking about their finances now?

To answer the first question, financial literacy is the understanding and skills needed for making responsible and educated financial decisions that lead to financial security and well-being. It involves a variety of skills relating to money management, including:

Opening a bank account
Paying bills on time
Budgeting
Understanding credit
Managing debt
Comparing investments/credit cards

Financial literacy covers a wide range of topics and is necessary for a lot of reasons. In a CreditWise study released in 2023, 73% of participants found finances to be the number one cause of their stress. Financial issues have been linked to mental health problems, high blood pressure, and compromised immune systems. Financial literacy can reduce this stress and provide a sense of security. It can be helpful in running a business, saving for retirement, and tracking personal spending.

In asking whether teenagers need to be educated in financial literacy, it’s important to consider the possible consequences of not having the right skills. Poor financial decisions can lead to unsustainable debt, bad credit, and even bankruptcy. A Forbes article states that students with an understanding of financial literacy are less likely to take out payday loans or have late fees. They have a better grasp of their student loans and the importance of applying for grants and scholarships. A class in financial literacy can teach the importance of saving and investing, and even the teachers of financial literacy courses have been found to experience an increase in their own savings.

To sum it up, financial literacy can reduce stress and increase affluence and security. Teenagers should be educated in personal finance so they can grow into adults with a concrete understanding of how to manage their money. Littleton’s Financial Reality Fair is an excellent way to teach students these skills and encourage educated financial decisions.

Works Cited

Camberato, Joe. “Council Post: Should Schools Teach Financial Literacy Classes?” Forbes, Forbes Magazine, 20 Feb. 2024, www.forbes.com/sites/forbesfinancecouncil/2022/10/11/should-schools-teach-financial-literacy-classes/?sh=281e24aa4633.

Fernando, Jason. “Financial Literacy: What It Is, and Why It Is so Important to Teach Teens.” Investopedia, Investopedia, www.investopedia.com/terms/f/financial-literacy.asp#:~:text=A%20strong%20foundation%20of%20financial,debt%2C%20and%20track%20personal%20spending. Accessed 1 May 2024.

Today, Purdue. “Mental Well-Being Inherently Connected to Financial Wellness.” Purdue University News, www.purdue.edu/newsroom/purduetoday/releases/2021/Q1/mental-well-being-inherently-connected-to-financial-wellness.html. Accessed 1 May 2024.

United Way NCA. “Youth Financial Literacy: Why Is It Important?” United Way NCA, 14 Feb. 2024, unitedwaynca.org/blog/financial-literacy-for-youth/.

White, Alexandria. “73% of Americans Rank Their Finances as the No. 1 Stress in Life, According to New Capital One Creditwise Survey.” CNBC, CNBC, 15 June 2023, www.cnbc.com/select/73-percent-of-americans-rank-finances-as-the-number-one-stress-in-life/.

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