I saw an article last week in USA Today that made me sad. The article, “Millenials Struggle with Financial Literacy,” outlined not only how little people in their 20’s know about personal finance, but also how much more imperative it is for them to be knowledgeable on the subject. After all, it is the twenty-somethings who are forced to deal with an average of $45,000 in debt, unwinding financial social nets (cough – SOCIAL SECURITY – cough), a 12% unemployment rate (4% above the national average) and a volatile economy still in recovery from mistakes that had nothing to do with them.
I’ve been working in finance for a few years and it is downright alarming how ill-equipped people are when it comes to managing their money. Personal finance isn’t rocket science, but it’s not just about money-saving tips and extreme couponing either. Money-saving tips won’t help much if you don’t know how much money to save or where to put it once you’ve saved it. People need a basic understanding of standard concepts such as income, debt, interest rates, unit costs, credit scores, etc.
Unfortunately, financial education seems hard to come by. It’s not a topic often covered in schools, although according SunAmerica Financial Group’s Retirement Re-Set survey, 92% of adults wish it were. 80% of respondents from that same survey would even like to receive it at work. If you, like many Americans, need good sources to increase your financial literacy, I have a few recommendations that provide a solid understanding of personal finance in clear, approachable and sometimes entertaining ways:
- The Money Book for the Young, Fabulous & Broke by Suze Orman: I know some people have mixed feelings about Suze Orman, particularly after the backlash from her pre-paid debit card. But this book is legit. I love that it is targeted for people who are just starting to live on their own income. The book covers everything from credit cards to home loans in a tone that is understanding of the plight of young, fabulous, broke individuals, but still straightforward enough not to leave room for excuses. It’s a fast read, largely in part because it feels like you’re getting advice from one of your girlfriends.
- Personal Finance for Dummies and Personal Finance in Your 20s for Dummies by Eric Tyson: The ironic thing about these books is that they don’t make you feel like a dummy at all. Rather, they break down important concepts for all life stages and even have a handy glossary at the end for quick future reference. While it doesn’t have the fun and sassy tone of Suze Orman’s book, they cover a wider breadth of topics, including taxes and retirement.
- Kiplinger’s Personal Finance Magazine: True confessions – I read this more often than OK Magazine. For fun. It is honestly that interesting. Granted, I skip over the articles that don’t apply to my life – home ownership, Exchange Traded Funds (ETFs), which are all the rage right now, and some of the more specific industry news. But there are always relevant and interesting features, including “Ask Kim”, which is like a financial “Dear Abby,” and “My Story,” which profiles average Americans through their personal financial triumphs and tribulations.
- Money Magazine: Money Magazine is also a wonderful personal finance magazine. I find it to be more advice-oriented and less technical that Kiplinger’s, which makes it an easier read for those of you who are still grasping the basics. Their current cover story, ‘The Best Deals on Everything,” reveals the best deals on everything from food and wine to stocks and bonds. But like I said before, make sure you include more than just money-saving tips in your financial literacy research.
- HelloGiggles: There’s this really cool blog called HelloGiggles. And it includes a personal finance column called “Cents and Sensibility” written by a former shopaholic who now works in finance and enlightens readers about topics like building a career, taxes and investing. And sometimes these two broke girls share hilarious tips on how to live large without spending large. There are myriad DIY articles and product reviews on inexpensive things, which can help you save. You should check out the site if you haven’t already.
I’m in my mid-20s, too. So I get that managing your money doesn’t seem like a priority when you don’t feel like you have very much of it. But financial literacy is the key to properly living within your means and safeguarding your future. Developing good financial habits now will better prepare you for the moments in your life that involve more complicated transactions and impact you on a grander scale. So whenever you get a chance, head to your local library, because that’s where things are free, and start educating yourself.