Understanding Financial Literacy is the Key to Young Professional Success
40% of adults in the U.S. don’t have enough savings to cover a $400 emergency. 56% of millennials don’t have any money saved in a retirement account. Over 40% of Americans have less than $10,000 saved when they retire. 20% of Americans don’t save any of their annual income at all. 43% of Americans spend more than they receive each month. Are any of these statistics shocking? There is a clear lack of financial literacy nationally in all age groups.
Identifying the financial challenge
Financial literacy encompasses the knowledge, confidence and ability to make positive financial decisions regarding managing money and assets, banking, investments, credit, insurance, taxes, budgeting, retirement planning, risk management and more. Ultimately individual’s behaviors impact their life and those alarming financial statistics.
Low financial literacy can lead to financial stress, which can negatively affect overall well-being, health, relationships and workplace performance. Individuals, families and companies have a stake in desiring improved financial literacy. According to a 2014 University of Arizona longitudinal study, nearly half of graduates with full-time jobs still rely on their parents for financial support. This raises concern about young professionals’ financial decision-making skills and may negatively impact parents’ ability to achieve their own financial goals.
Companies are also affected by employee’s financial literacy levels. According to a study by Purchasing Power, nearly 50% of employees are stressed about personal financial issues during work hours, and nearly 30% of American workers have spent time dealing with personal finances while at work. This creates a presenteeism issue in which an employee is at work but performing at suboptimal levels due to being distracted by personal issues and other concerns.
Make change to make change
Individuals, families and workplaces can all be positively impacted by improved financial literacy and decreased financial stress. Specifically, young professionals with a long time horizon have the ability to make a significant financial impact for themselves through compounding interest. When invested, compounding interest can cause wealth to snowball. Small changes in financial behaviors can create significant values over a long time horizon.
According to a 2013 Financial Finesse study, 93% of employees improved financial behaviors after completing a workplace financial educational program. Do you want to increase your financial literacy? The Des Moines Young Professionals Connection (YPC) has an upcoming financial literacy workshop series with topics including:
- Financial freedom for millennials,
- Personal budgeting,
- Debt management,
- Employee benefits and insurance,
- Identity risk management,
- Life insurance and estate planning,
- Identity risk management,
- First time home buying, and
- Private company valuation and exit strategies.
I encourage you to take steps in improving your financial literacy – the first step might be as simple as attending one or more of these workshops. Details for each workshop can be found at: http://ypcdsmia.chambermaster.com/events/calendar/2019-05-01.
Young Professionals Connection (YPC) aims to attract and retain young professionals in Greater Des Moines (DSM) by connecting emerging leaders to each other and to the community through social, civic, charitable and professional development endeavors. Learn how you can get involved.