Trending
Nearly everything involving money has a time component to it. On the negative side of the ledger, the more someone makes only the minimum payments on credit card debt or delays saving for retirement, the more likely they are to suffer consequences.
Conversely, the earlier someone starts investing and saving for retirement, the more they leverage time in their favor. Assuming the appropriate amount of patience is exercised and attempts at market timing are eschewed, the likelihood of a substantial portfolio increases. Point is, financially speaking, it’s almost always better to take action now than putting it off.
That’s certainly true of financial education. So if you’re a parent, get started on the financial lessons with your kids early. If you’re a young adult, someone that feels their financial literacy needs shoring up, someone that’s curious about financial, or any combination of all three, consider working with an advisor to attain the desired level of financial education.
For advisors, incorporating more elements of education into client interactions, particularly with clients that have young children, could pay long-term dividends in terms of retention and those clients’ heirs eventually becoming clients as well. As for early financial education in broad terms, data confirm the rewards are tangible.
More Financial Education Can Equal More Moola
While the costs associated with traditional education has escalated to a point where it can take years for families and students to breakeven on those investments, early financial education can pay important dividends. Consider the findings in a recent Bankrate survey.
The research firm asked 2,600 questions about whether they had held a job prior to turning 18, whether they applied for a part-time job, receiving money as a child for doing chores, reduced debt with their own money, budgeted for a sizable expenditure, managed their own bank account, had conversations about finances with their parents and invested in the stock market.
Fifty-four percent of those queried did not fulfill all of those standards, but 46% did. Those financial lessons paid off later in life, particularly in the 46 percent’s professional lives.
“Of those who have a strong financial education and have successfully negotiated pay raises during their careers, 66% said they have successfully negotiated a pay raise at least once every five to 10 years, including 60% who have done so at least every few years, 33% who have done so at least once a year and 10% who have done it more than once a year,” according to Bankrate.
On the other hand, just 39% of those that said they didn’t receive much or any early financial education said they’ve successfully negotiated raises and a mere 17% confirmed they did so in the past 12 months.
Financial Education Breeds Good Habits
As has been widely noted in this space, for one reason or another, financial conversations are widely viewed as taboo. Worse yet, that’s the case within families, but spouses need to get over it, perhaps with the help of an advisor, because once they’re comfortable talking about money amongst themselves, they can pass it onto their children.
That’s important because those conversations can help facilitate good habits while avoiding the development of bad ones. Think about this way. Good parents are already talking with their children about the ills of alcohol, drugs and nefarious things so why not make the time to include the importance of saving, good credit scores and avoiding debt? Point is sound early financial education pays off later in life.
“Those who were raised with a financial education were significantly more likely than others to say that over the past year (i.e. since January 2024) they set a budget, paid bills on time or practiced other healthy financial habits,” adds Bankrate. “For example, 80% paid their bills on time over the last year compared to 76% of Americans with little to no financial education growing up. Over half saved money for the future, looked up their credit scores and tracked their spending. Roughly half set a budget, and a third invested in the stock market.”