Ric Edelman, nationally recognized personal finance expert, has been sounding the alarm on the crisis of financial literacy that is confronting our youth in America. As the founder of Edelman Financial Engines, he emphasizes the urgent need for financial education. In doing so, he’s encouraging young investors to fortify their personal finance knowledge. One thing that astonishes Edelman is the lack of mandated financial education in high schools. Another big piece, he says, is the complexities of corporate America.
Edelman is convinced that today’s educational establishment is not preparing young people to be financially literate adults. As he points out, most high schools don’t require personal finance courses, which means students are sent out into the world without an understanding of their future financial challenges. “We spend a lot of time trying to improve financial literacy. We stink at it,” he stated during his appearance on CNBC’s “ETF Edge.”
It’s downright confusing, according to the well-known financial guru, for the young investor today. He points out that corporate America tends to create complex, confusing, and expensive financial products. This method lacks transparency, misleads consumers, and makes it burdensome for consumers to compare options and make empowered decisions. “They want to make it complex, to make you a hostage rather than a customer,” Edelman remarked, highlighting his concern about the barriers young investors face.
The difficulty of financial literacy is exacerbated by the eagerness of many young people to fall prey to get-rich-quick fads. Edelman began to realize that these young people were having trouble making their monthly bills. As such, they have virtually no disposable income to invest or save for their future objectives. He explains, “Today’s youth looks at their parents and sees how poorly they were prepared for retirement. They don’t want that to be their future.”
Edelman’s view is especially significant as Edelman is a member of that post-war, or baby boom, generation. He emphasizes that this new generation is the first to see longevity as a default expectation in life. “We are the first generation, as baby boomers, that will live long lives as part of the norm,” he noted. This stark reality brings to light the importance of financial literacy. People need to assume more responsibility for their own financial futures, in particular due to increasing life expectancies.
The challenge has never been more urgent than in today’s polarized climate. It’s no surprise then, that millions of young people are getting their financial advice from social media platforms like TikTok. Edelman cautions that craving concrete answers from these sources leaves room for misinformation to flourish, resulting in confusion and bad decisions. “When so many are getting their financial education from TikTok, that’s a little scary,” he said.
It’s understandable that Edelman would be optimistic about the future. Perhaps most importantly, he emphasizes that young Americans are fiercely determined to succeed financially, despite the odds stacked against them. To Johnson, that means we need to address financial literacy in a big way immediately. This understanding will prepare our generation to succeed in a new and complicated economic environment.
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