As advisors, we expect our clients to save for their own retirement, use credit wisely and manage their money. Cross the threshold into the millennial generation—a generation riddled with an increasing amount of debt, financial ignorance and sometimes, I dare say, a sense of entitlement—and you have an untamed new breed of consumers that need even more guidance than those before them. We, as advisors, parents and members of society, not only sat back and watched it happen, we had a hand in creating it.

This dilemma has become the perfect storm: an emerging society of millennials in financial distress while simultaneously the government is transferring the accountability of savings and sound financial decision-making to a group of individuals faced with the threat of diminishing Social Security and non-existent guaranteed retirement payment programs. We have now shifted the burden of financial responsibility to the very group of people who don’t know what they don’t know because we haven’t mandated, up until now, that financial literacy be taught in our school systems.
Current State Of Affairs
Millions of American teenagers graduate from high school every year without a basic understanding of how to manage their money. As they venture out from under their parents’ protection for the first time, what awaits these young adults is an increasingly complex society that asks them to make immediate and sometimes irreversible financial decisions—decisions that will likely impact their livelihoods for years to come (about student loans, lease agreements, relocation/job offers). They are unprepared by teachers or parents to make those decisions, and the consequences have already proved quite severe whether you’re low, middle or upper class. No one is immune.

Today’s students need a strong foundation in personal finance to help them budget and manage their money. Many students work during high school and some even have credit cards in their own names. After high school, young people making uninformed decisions hurt their credit ratings with high debt-to-income ratios. It is not until they try and rent that first apartment or buy that first car that they come to understand the consequences. Only with newly mandated curricula in our schools can we lay the groundwork for a new group of contemporaries who are competent, confident and financially informed adults.

What has been required in our schools up to this point has been a moving target. Irrespective of the state you live in, or whether it’s private or public education, schools have only been encouraged to supplement their syllabi with financial literacy programs. Unfortunately, these programs have failed. The small amount that was taught in the classroom does not seem to have projected itself into the home. If you think about it, the most common support offered to families is crisis management: debt reduction, college loan debt repayment and consumer credit counseling—which are all Band-Aids for the real issue.

Teachers have not been properly educated in teaching behavior change, particularly in economic subjects. And the learning methods of millennials are far different from those of previous generations. They are intrigued by gaming. They are “surface seekers” who require little detail. So we need to move away from the static data and take into consideration the style of the learner. For millennials, the traditional education of rote learning and memorization needs to be abandoned in favor of task-based approaches that are student-centered and focused on the students’ lifelong needs and self-expression. Instead of spending class time listening to the teacher lecture, students should spend that time having the theories reinforced with interactive labs and discussions about economics.