Youth Financial Literacy: A Crisis That Needs to Be Addressed

Financial literacy is at a crisis point in America. According to a 2025 report by Ramsey Education, almost nine in 10 US adults believe that their high school education did not “fully” prepare them for managing their finances. Meanwhile, 73% of respondents said that they’d be in a stronger financial position if they had the opportunity to take a personal finance class in high school.

Financial literacy begins in childhood and is especially important given that young people are exposed to potential debts like student loans and credit cards as early as their teenage years. In fact, according to the National Endowment for Financial Education, millennials had an average of approximately $60,000 in debt by their mid-20s. When you factor in the rising tide of predatory lending and other financial scams, young people need to be equipped with the tools and knowledge to avoid such pitfalls.

Fortunately, personal finance courses are becoming increasingly available in high schools across America, with Gen Z being the generation most likely to have taken one. Still, many states do not require these courses, meaning many young people will enter the real world without the financial literacy they need to make smart money decisions.

What Constitutes Financial Literacy?

According to Youth.gov, financial literacy includes five areas of knowledge. Along with having an understanding of credit cards and their interest rates and being able to identify scams, people who are financially literate are proficient in savings and investment strategies, know how to navigate benefits programs, and know how to access and use a bank.

With these skills, young people are more likely to avoid financial vulnerabilities like borrowing with payday loans, building up large private-loan debt, carrying a credit-card balance, and experiencing defaults or delinquencies. They’re also more likely to pay down debt quickly, find lower-interest borrowing options, and have money in savings.

Who Is Most Vulnerable?

Research has shown that people of color have lower rates of financial literacy than their white counterparts. These disparities exist due to institutional barriers and systemic racism.

Sadly, these disparities also begin to develop early in life. According to a 2020 report by the US National Strategy for Financial Literacy, among 15-year-olds, white and Asian students scored significantly higher in financial literacy compared to the general population. Hispanic and Black students, meanwhile, scored significantly lower.

Financial Literary Programs

Recognizing the lack of personal finance courses in many high schools, a variety of groups and individuals have stepped in to fill the gap. For example, Youth Finance University is a student-led effort to provide financial education to children as young as 7.

Founded by students at Newport High School in the greater Seattle area, Youth Finance University is driven by the mission that financial literacy should be attainable for everyone. The initiative came together after the founders saw many of their classmates making poor financial decisions stemming from a lack of knowledge about personal finance.

Realizing financial education should begin at a time when children are experiencing rapid cognitive development, the founders partnered with teachers and a child development specialist to create interactive, age-appropriate lessons for children in elementary and middle school. Today, Youth Finance University offers free classes via Google Meet in which students from the greater Seattle area learn about complex financial topics in an engaging and informative way.

Among the other organizations offering youth financial education is the Annie E. Casey Foundation. A nonprofit committed to ensuring young people have the resources to excel, it maintains several programs aimed at supporting young people who have been in the foster care system.

According to the foundation, young people receive much of their financial education from observing their parents. Because youth in the foster care system often do not have these opportunities, the foundation’s Opportunity Passport provides support in learning to save money. With the unemployment rates for young people aging out of foster care are as high as 69%, Opportunity Passport assists with securing employment and provides matching funds as young people put their hard-earned money into savings.

The foundation’s Keys to Your Financial Future, meanwhile, is an eight-part program in which older youth learn what it takes to become financially secure. With the help of these guides—or “keys”—students enhance their financial knowledge, leading to smarter choices.

Success Stories

The results of financial literacy are profound. Youth Villages, another nonprofit that supports youth who have interacted with the foster care system, has tallied many success stories.

One young woman named Nicky, for instance, has taken the lessons instilled in her by the nonprofit to buy a car, rent an apartment, and return to college. All the while, she has started a vintage textile business that is now thriving.

Another college student, Isaac, experienced homelessness and lived in a shelter as a youth, but he is now working and saving money while pursuing a degree in computer science and even assisting his mother with obtaining insurance.

Stories like Nicky’s and Isaac’s are powerful examples of how financial literacy can change young peoples’ lives for the better. Although approximately 29 states require personal finance courses as part of the high school curriculum, schools and communities need to place an even greater emphasis on equipping young people with the tools and knowledge to secure their financial futures.