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A Growing Concern: The Financial Literacy Gap Among Youth

In a rapidly changing financial landscape, the importance of financial literacy cannot be overstated. A recent survey conducted by EVERFI, which focuses on digital financial education in K-12 schools across the United States and Puerto Rico, sheds light on a troubling trend: high school juniors and seniors are significantly unprepared to manage their personal finances. This lack of preparedness is particularly alarming as these students prepare for the challenges of adulthood and financial independence.

Key Findings from the Survey

From July 2024 to February 2025, EVERFI gathered data revealing critical gaps in financial understanding among high school upperclassmen. Here are some standout findings from the survey:

• - Current Financial Products: Despite engaging with financial products, 47% hold a savings account, 51% a checking account, and 21% a credit card. However, a staggering 60% feel incapable of responsibly managing their credit.
• - Digital Payment Confidence: Many students express interest in using peer-to-peer payment applications, yet only half are confident in navigating these tools safely and avoiding online scams.
• - Higher Education Financing: While a majority plan to attend college, 53% are unsure how to structure a repayment plan for their student loans, indicating a disconnect between their aspirations and financial planning.
• - Investment Knowledge: The interest in investing is palpable amongst Gen Z, yet 69% find the topic intimidating, with only 12% able to explain stock market fundamentals.
• - Parental Communication: Conversations about money management at home are infrequent, with only 40% of students engaging in discussions about finances, although these talks increase when financial education courses are part of their curriculum.

The Need for Financial Education

Ray Martinez, CEO of EVERFI, emphasized the critical need for effective financial education for upcoming adults. “After high school, these young individuals face unique financial challenges that require them to have knowledge and skills for making sound financial decisions,” he stated. As states increasingly mandate personal finance education as a graduation requirement, there's an emerging opportunity for the private sector to support educational efforts, which would also benefit banks and credit unions in fostering trust among future consumers.

Research indicates that one-off financial literacy courses are insufficient. The MassMutual Foundation, in collaboration with EVERFI, found that students who took multiple courses showed increased long-term confidence in their financial skills, noting that knowledge retention remained significant even after course completion. Importantly, these students maintained communication with their parents regarding financial matters, contradicting the trend observed among those who completed just one course.

Investing in the Future

The interest in investment education amongst Gen Z has driven further research by EVERFI, especially regarding the Marketplaces Investing Basics™ course. The findings revealed that financial education could enhance students' confidence and prompt proactive investment behaviors.

Martinez points out that positive behavioral change is the ultimate goal of financial education. However, self-efficacy remains a key barrier. To facilitate this change, students need opportunities for risk-free financial practice, boosting their readiness to engage in real-life financial scenarios. Recognizing students who take the initiative in acquiring financial literacy—be it through scholarships or wealth-building accounts—further encourages responsible decisions.

April's Financial Literacy Month

As April marks Financial Literacy Month, it serves as an ideal reminder for financial institutions to assess their role in supporting youth financial education. EVERFI encourages schools and financial institutions alike to enhance resources that empower young people in their financial journeys.

Conclusion

The survey's findings make it evident that while this generation is eager to learn about personal finances, they require proper guidance and educational resources to navigate this essential life skill effectively. Ensuring that young people are well-equipped for their financial futures is not just beneficial for them; it is vital for the overall economic health of society. Learn more about supporting financial literacy education initiatives at everfi.com/sponsorship.