GENERATION Y AND THEIR FINANCIAL EDUCATION

Generation Y have grown up in an era where they were not only shielded from a lot of financial responsibility, but they also grew up in an era of consumerism – where it was perfectly acceptable to buy that purse, vacation, or front row concert ticket – all on credit.

Now, the financial crisis has affected almost all aspects of their financial existence, from getting their first job to paying off their college (and credit card) debts. Generation Y is struggling to make financial headway, in an economy that is still showing the strains from the generations that preceded them.

And, if that alone wasn’t hard enough, Gen Y’ers, despite engaging in more sophisticated and savvy money management tools are still not educated enough on personal finances to make sound, informed and basic financial decisions.

Only 52% of High School Seniors passed a recent Financial Literacy Test. America has young adults entering the work force, who do not know enough about basic budgeting, interest rates or taxes to make the financial decisions in their own lives that are a critical part of gaining financial independence and security. Their inability to understand, and manage their finances is demonstrated in our countries bankruptcy filings. 22.7% of all US Bankruptcies filings are by young people between the ages of 25 and 34.

So what can we do to help a generation that is drowning in debt, in a bleak economy? The financial landscape of today is vastly different to what it was twenty years ago, the game plan, and the rules have changed. The financial products offered today are more complex than ever before, and understanding the risks – and the benefits – of these products, along with a practical and realistic view of their current financial situation and short to medium term goals, is an important part of financial responsibility.

The Department of Treasury recently released the Draft National Strategy for Financial Literacy 2010. The national strategy identifies five action areas—policy, education, practice, research, and coordination. The purpose of the National Strategy 2010 is to create an overarching framework that all organizations involved with personal-finance education, research, practice, and policy will find useful to help guide their work over the next three to five years. The National Strategy 2010 has four main goals:

Goal 1: Increase Awareness of and Access to Financial Education
Goal 2: Determine and Integrate Core Financial Competencies
Goal 3: Strengthen Provision of Financial Education
Goal 4: Identify and Share Effective Practices.

Although financial education alone does not guarantee financial success, it is nevertheless important that individuals and families are aware of and have access to reliable, clear, timely, and relevant financial information and educational resources. Likewise, it is important that individuals and families be aware of the need to access these resources. A recent U.S. survey of financial capability showed that many individuals overestimate their financial knowledge and lack an understanding of key financial concepts.

For more information on financial education resources currently available visit http://www.mymoney.gov - the U.S. government's website dedicated to teaching all Americans the basics about financial education.