Where to Begin by Bill Donahue
While a good financial advisor should be able to steer an investor into investment vehicles designed to multiply his or her funds, it may not be a realistic option for all. Some people believe the country could benefit from earlier interventions to help all Americans start out on surer financial footing.
“What is the root of the problem? Education,” says Crystal Evans, author of the book Money Talks: Entrepreneurial Hardships & Triumphs. “I didn’t learn certain things in high school that maybe I should have learned. No one is educating children about money. That’s why I think financial literacy should be part of the curriculum. It’s something that should be learned right away, even before you enter the work force.”
That’s one reason why Evans has lobbied members of Congress to pass legislation that would introduce financial literacy into schools. She also regularly hosts conferences and meetings locally so attendees can “walk away with useful information to improve their everyday lives,” she says.
She believes doing so would help those in the Greater Philadelphia Area—particularly those battling the socioeconomic and economic adversities of urban communities— make more informed decisions that can affect their financial future.
Such education seems in high demand. Eighteen percent of Americans say retiring without having enough money set aside is their chief worry associated with personal finance, according to the 2017 Consumer Financial Literacy Survey. Conducted on behalf of the National Foundation for Credit Counseling, the survey aims to shed light on consumers’ financial knowledge, as well as their behaviors and attitudes toward personal finance. Alarmingly, the survey suggests 27 percent of U.S. adults do not save anything for retirement.
“Anymore, people are retired for a long time, so the money has to last them for 20 years or even longer,” says Hernandez. “That’s especially true after what we saw in 2008-09. If the market takes a 30 percent hit, you could be sitting on a 401(k) worth $1 million and then all of a sudden the $1 million is worth $700,000 and you’re not retiring when you want to retire. People have recovered from that, but they didn’t forget, and that’s making them more cautious.”
What might that cautiousness look like? Investors may decide to reduce stocks in a portfolio in favor of bonds, cash or precious metals—in other words, investment vehicles that should “hold up” if the stock market takes an unexpected turn.
The survey shares some encouraging insights, too: Millennials (ages 18 to 34) are more likely to be saving more than adults age 35 and older. Hernandez believes they may have seen what happened to their parents during the so-called Great Recession and are now taking the bull by the horns.
Teens are too young to have bad credit , yet if you don't teach them how to manage their finances when they are young. They will grow up embarrassed and in economic distress, questioning why no one taught them the vital money management skillsets needed to manage their lives.