Young people’s mastery of Pokémon GO gaming and the Snapchat digital social world is undisputed, but their ability to manage life’s more essential fiscal tasks is not. This could prove dangerous in a world where online P2P lending and alternative financing is all too accessible and convenient.
The Consumer Financial Protection Bureau released a report on Sept. 7 on financial education for youths, including tools for educators, according to CU Insight. The report provides new resources for educators of finance, including “Building Blocks to Help Youth Achieve Financial Capability.” Based on a developmental framework described in the report, the bureau also released a personal finance teaching tool to be used in schools.
CFPB Director Richard Cordray said: “The first line of defense for consumers to protect themselves is the ability to make informed and responsible decisions, and financial education that starts in childhood is an essential first step.”
The report defines financial capability as “the capacity to manage financial resources effectively, understand and apply financial knowledge and the ability to make a plan, stick to it and successfully complete financial tasks.” The Building Blocks feature highlights milestones that young people can use as a guide in achieving a level of financial capability and security.
For example, between the ages of three and five, children can be expected to demonstrate executive function — the ability to set goals, save and budget. By age six to 12, sensible financial habits should be established, such as following routines and norms related to finances — paying bills regularly and on-time for, example. From ages 13 to 21, the milestones focus on financial decisions, such as financial planning, research into borrowing or buying assets, such as cars, and managing student loans.
Real-life examples require applying learned capabilities. This type of financial education curricula that includes developmental models should improve the financial education of young people.
Mind you, most young people brought up with mobiles and devices in hand will be more adept in the mobile digital world of alternative financing than their educators may ever be.