Next month, I will once again be a volunteer teacher for Junior Achievement, which teaches financial literacy to children in grades 3-12. Why? Because hands-down I think this is one of the biggest problems we have in the U.S. that can easily be addressed– and not only is it important to us as a society, but being financially savvy is the key to success for each and every individual both professionally and personally.
First, the choice we make for our career path will play a large part in our life. Many of us are defined by our careers, and there is a direct correlation in terms of how happy you are at work and how happy you are in life. Given that we will spend most of our adult lives working, you better like what you do, and whatever income you derive from that job, you must learn to live within your means.
Second, higher education comes at a hefty price. If you are borrowing thousands of dollars to earn a degree, you have to be cognizant of the fact that this debt will follow you for some time, and while I personally believe it was worth incurring $100,000 of debt to attend law school 16 years ago, I am not sure I would say the same now given the state that industry is in today. Digging out of that hole is not easy and while you are paying off that loan you will be limited in your lifestyle– your ability to borrow for a car, a house, or anything else will all be less because of the mortgage you essentially took out to earn a degree.
Third, once you have settled into life a bit and are ready to find a partner, and you cannot ignore the economic realities of this merger. Two people that decide to become a family under one roof are going to have a tremendous impact on one another– socially, emotionally and financially. If you marry someone with limited education, insufficient income to be self-supporting, and/or poor credit, this is going to add huge stress and create a major power imbalance in the relationship. At first this may not seem to matter much, but believe me that over time I have seen this wear on people, especially when little ones come into the mix further adding to the financial pressures of a household.
Fourth, for those that fall into the 50% category of couples that wind up getting divorced, there are some harsh economic realities that a person will face if s/he does not have a college degree and an income of at least $80,000 in the DC Area. An individual that remains economically dependent on the other after a divorce will remain in a vulnerable position until s/he becomes fully self-supporting. Why? Because if the other person suffers a decrease in income or dies, it will impact the recipient of any support. Most courts cannot require someone to maintain disability or life insurance, so if the payor has some catastrophic event in his/her life, the other person may well be SOL.
Luckily, most of my divorce clients have college degrees, good paying jobs, and are not about to face financial ruin as a result of their split– but the Great Recession definitely took its toll on all of us, and many went back to court to seek a reduction in alimony and/or child support payments. As a result, I got to see first-hand the precarious situation many put themselves in because they lacked financial literacy, which is such a basic skill we should all be teaching our children now if we want them to thrive as adults.
If you would like to learn more about Junior Achievement, or want to be a volunteer for this great organization, which I featured last year on my tv show, please check out: www.myja.org
Here is the link to the show: https://www.youtube.com/watch?v=-1jr4E5Ny84