Why Provide Financial Literacy to Teens and Young Adults?

The State of Financial Literacy

 Despite a rising average net worth in the United States in recent years, the real story behind the headlines paints a vastly different picture. The wealthiest 10% of Americans – those who own real estate and have market-based portfolios – have disproportionately been the beneficiaries of wealth creation. For the remaining 90%, the average level of debt is staggering.

Consider the following trends: Car loans were previously three- or four-years long. Purchasers now commit to seven-year loans to qualify. Home loan debt-to-income ratios used to be capped at 28%; presently, the allowed ratio is 43%. Servicing credit card debt now costs the average person almost $1,000 per year in interest. We spend $750 more per year than we should on work-sponsored healthcare, because most employees are ill-equipped to weigh their options effectively. Our retirement accounts contain barely more than an emergency fund should have.

Most of these challenges stem from a very basic problem: two-thirds of Americans cannot pass a simple financial literacy test. And by the time financially-illiterate adults are responsible for learning the system, economic strife is a public health crisis: stress-related illnesses, and drug- and alcohol-abuse are pandemic. Teaching young adults to grapple with personal finances is paramount to their future success and well-being. In fact, our primary and secondary educational institutions should be central to solving financial illiteracy.

You and Your Money: Shaping the Journey

Our financial literacy programming, ‘You and Your Money,’ is designed to introduce personal finance concepts in an easy-to-understand context, with clear and straightforward objectives. In ‘You and Your Money: Shaping the Journey,’ we tackle the basics for teens and young adults: learning to make sound decisions, to set goals and to understand the intersection of these choices and their consequences. The seminar, which can be designed for up to three hours, is highly interactive, as we find this method engages students most effectively.

We begin our discussion with goal-setting. Identifying various lifestyle choices and the financial implications of those choices provides an ongoing framework to the program. Students take a quick quiz at both the beginning and end of the program to assess their comfort with the financial topics. Throughout the seminar, we cover the basic topics of budgeting, saving and investing so students have the essential tools of financial literacy at their disposal. But what distinguishes us from other programs is our equal focus on the context of these topics.

  • Economic Realities
  • Goal Setting Basics
  • Understanding Budgeting
  • Paying Yourself First
  • The Rule of 72
  • Investing Basics


About Ilene


Ilene Slatko, Founder and Principal of DSS Consulting, first wrote ‘You and Your Money’ in 1987. Originally presented on behalf of the Financial Education Center in Northern Virginia, the program grew to standing-room only audiences, TV airing of the programs and video copies available in DC area public libraries. She has been a keynote speaker and conference seminar speaker. As a single mom to two now-grown children, Ilene understands the singular decision-making most teens engage in.

This decision-making tendency and the resulting potential lack of cohesion in a life plan is one of the primary drivers of ‘You and Your Money: Shaping the Journey’.


Why Provide Financial Literacy Programs?

As an employer, you wear numerous hats. Hire, train and maintain employees. Create, market and sell your goods and services. Practice sound decision making so that each day, you and your team make magic happen all over again. It often feels like a tricky intersection of self-serving interests competing with more generous ones.

Want to combine your competing interests? Here’s one area that studies support. Workplace financial literacy programs can work. And are, more importantly, critically needed.

According to the American Psychological Association, a majority of Americans cited “money” as their biggest cause of stress. Statistically, close to 60% of your employees worry every day. Every day. They worry they won’t make ends meet this month, or next. They certainly worry they may not have adequate resources in retirement. They come to work worried, and leave the same way. Not so shockingly, this impacts their performance at work.

Workplace financial literacy programs can ease the concerns of your employees by equipping them to make better financial decisions and suffer less money-induced stress. The most commonly reported symptoms of stress are feeling irritable/angry (37%), being nervous/anxious (35%), having a lack of interest/motivation (34%), feeling fatigued (32%), feeling overwhelmed (32%) and being depressed/sad (32%).

As a result of this stress, absenteeism, alcoholism, more doctor’s visits and an overall sedentary lifestyle are what you end up funding, through lost productivity, additional health care costs and higher insurance premiums.

Studies show that stressed individuals cost companies more than $300 billion dollars each year. Over $100 billion alone can be attributed to absenteeism. 

It is time for workplace benefits to include financial literacy programs. The bad decision-making that was evident as a root cause of the Recession of 2008, is still evident. We take on too much high-interest debt, buy homes and cars we can’t afford, drain our retirement accounts and maintain barely enough in the bank to cover a partial month’s expenses.

It not only benefits your employees. The Personal Finance Employee Education Foundation (PFEEF) reported an ROI of as much as $3 per dollar invested in a financial wellness program.

Although 57% of employers believe financial literacy education boosts productivity, only 25% of employers actively provide workplace literacy programs. Which side will you and your employees be on?

What your Financial Advisor Can’t and Won’t Tell You

I loved being an advisor to my clients in the financial business. Many of those relationships lasted close to two decades, which in a business where results are unknown and communication key, pleases me.

With profound respect to my former peers and former clients, I’m going to share something you may know, in a deep-in-your-belly kind of way, but it almost always remains unsaid: we’re not certain how our recommendations will turn out. It’s not that we shoot from the hip: some of the smartest people I know are analysts and financial advisors who care about vetting investments and recommendations. It certainly isn’t that we don’t care: in my almost 30 years I found advisors who routinely went out of their way to get to know and stay connected to clients and their families.

But the truth of the markets is they’re fickle. We brace for upheaval in the bond markets when the yield spread gets too narrow, and then bonds continue on their merry way. We wait for interest rate pronouncements from the Fed, and the markets yawn.

Of course, that’s just of late. In mid-1987, there weren’t many advisors warning clients to protect themselves against the impending 25% drop in the market. Again in 1990, when techs tumbled or in 2008 when financials failed; advisors continued to suggest clients stay the course.

Because while we never really know how the market will behave tomorrow or later this year, investors who allow their advisors to guide them will almost always have the benefit of the long-view. And the long-view is the money maker.

That is not to say financial advisors are always right. They’re not. They may be less aggressive than you want, or too much so. They are people who have an amazing responsibility and I have seen more than several leave the business because of this.

But knowing the future, or even pretending to, is a fool’s game. Calling price action is a waste of time and something no experienced advisor would do. Or should.

Your advisor may not be right for you. Not because they don’t know the future, but because they don’t know you. That’s another part of what they can’t and won’t tell you.

The advisor/client relationship works best when there is knowledge and trust on both sides. Knowledge of the parties, of the investments, and of the markets. Trust in each other and in the belief that the past is a decent predictor of the future.

I not only truly believe that the relationship is paramount, but I ran my practice that way for nearly 30 years. In the final analysis, its less the right investment and more the right fit.

Are You Someone Who Needs Help Taking Control of Your Financial Life?

Surveys suggest you might be. More women than ever are worried about retirement and not having enough money, than in any survey done previously. Men worry, too, although in fewer numbers.

Is this purely a gender issue or is there real cause for concern?

The fact is we don’t save or invest enough. None of us do and that is not gender based. What is gender based, however, are the circumstances that frame many women’s lives. Namely, we tend to relax duties or leave the workplace for some time during our careers to either care for children or care for parents; we still earn, less on average, then men; and we live longer which means our money has to last even longer.

So, while the worry isn’t necessarily gender based, it is a warranted concern. The statistics on retirement, investing, and longevity are so intertwined that it’s understandable when we choose only one factor upon which to base our projections. In the short term, that may make us feel better about our situation, but as the economy and regulations change, our lack of understanding of the longer-term consequences can be disastrous.

For instance, a number of years ago, 5% was often used by investors to calculate the amount they could safely withdraw from their retirement annually, over their lifetime. This rule of thumb was based on the high interest rates and corresponding average return in portfolios. More recently, when trusts started to utilize the total return approach, the interest rate for retirement income was dropped to 4%.

However, two papers, ‘The 4 Percent Rule is Not Safe in a Low Yield World’ and ‘Asset Valuation and Safe Portfolio Withdrawal Rates’ (Blanchett, Finke, Pfau, 2013), shed serious doubt on the sustainability of this approach. They examined then-current interest rates, and the rate of failure and success, long-term, of basing a retirement income stream on 4% for the life of the retiree. Although since last summer, interest rates have begun to rise, our continued longevity argues for an even lower assumed interest rate in order to protect against assets being depleted before life-end.

With the current interest rate on a 10-year Treasury at 2.4% (considered the “riskless rate”), how are we going to consistently generate 4% or even 3%?

In nominal terms, the difference on a $1,000,000 portfolio between taking 5% annually ($50,000) and 3% annually ($30,000), means you’re taking a huge haircut on your monthly retirement income.

What’s a woman to do?

It’s clear to me that we have not saved enough. We have not invested well enough with what we’ve saved. (A recent AP poll said that most of us have a hard time coming up with $2,000, so this isn’t hyperbole).

Since ‘not outliving our money’ only has a few variables, let’s take a look at the ways we could change that scenario:

One, die sooner. I can’t speak for you, but I really don’t like this variable.

Two, live on less. This is the fall back, and it’s a good idea to begin to think what that would look like for you. (Move to smaller home? Eat out less? Forgo medical needs?) Not a great choice, but certainly better than #1.

Three, make our money grow faster. This is an interesting variable, although since common sense would tell us a greater return comes with a greater risk, this opens an entirely different door. This variable certainly has possibilities.

Four, put more money away regularly. Ah, the mother lode of variables! The one you have the most control over, and is easiest to accomplish.

Wait, I know. You can’t afford to put more away.

Hogwash. It’s simply not true.

As you read this, are you sipping your latte? Wearing designer clothes or shoes? Are you heading out to lunch or dinner instead of preparing at home? I’m not advocating that you abstain from life in order to put every penny you earn aside for the future. Although, the media is full of testimonials from people who have saved large amounts on relatively small salaries! (The last one I saw was, “Woman saves over $100,000 in six years earning only $30,000 per year”).

But changing views on how money grows, what risks you take when you invest (and those you take when you don’t), and how to pick from different investment vehicles are important topics. Without an understanding of these topics, the choice between saving or spending may feel murky; investing becomes less of an imperative.

When saving and investing doesn’t feel like an imperative, good intentions become lost in the rear- view mirror, and suddenly, our intention to start funding an IRA when we’re in our 20’s morphs into finally funding an IRA at 60, when all of the other obligations in life have been taken care of.

In fact, this is precisely what a study in Canada found. Among other key findings, the Women’s Financial Empowerment Summit (2014) found, “General consensus that women associate their financial wealth to the (sic) financial health of their children; whereas men seek products or services that better positionthem for retirement.”

Another study (Hsu, 2011) found that, “As women reach widowhood, they seek to increase their financial literacy due to the absence of a male in the household who may have been responsible for household decision making; implying that women may not have an incentive to pursue financial literacy while their husbands are alive and healthy”.

Older women pursuing financial literacy is good, but given how money compounds OVER the years, the opportunity cost associated with this late-in- life learning is huge.

Should you think this is only an ‘older woman’ issue, think again. From the Canadian study, “Young women are less likely to be making decisions on their own. When looking at age and decision making, of the male respondents between the ages of 40 to 49, 67% identified as being the primary decision maker.

While for women in the same age category, 40% identified as the primary decision maker and 47% as sharing responsibility. Notably, 29% of women between 18 and 29 were more likely to have someone make financial decisions on their behalf compared to 22% of young men”.

So, do women need their own set of financial programs? We do. We need to be spoken to and connected with in a way that’s different than men. We need desperately to play catch-up, because the lives our lack of knowledge and action impact are our own. I am very proud to be part of the solution of financial programs for women. Equally proud to work with a firm that places value in this, as well.

Financial Fitness in the Workplace

According to numerous independent studies, financial fitness programs may be joining other corporate wellness programs and coming of age in 2017.

When it comes to attracting, and retaining employees, companies have focused on programs designed to help employees meet goals in areas such as physical wellness, smoking cessation and empowering volunteerism.

A 2016 PricewaterhouseCooper’s employee wellness survey found 45% of respondents citing ‘worry over financial matters’ caused the most stress in their lives. 17% reported those financial issues impacted their productivity. No wonder, then, that financial fitness programs are being added to the mix of workplace perks.

Ask any employee how productive they are when they worry about paying their mortgage or rent, putting groceries on the table, or affording childcare. Companies willing to offer financial programs on topics such as investments, home buying, or budgeting are helping to keep their employees productive, and less anxious.

Years ago, offering on-site financial programs were fraught with potential conflicts of interest so many companies stayed away from offering them. It is appropriate and timely that companies are realizing employees need this information and the workplace is the most likely and accessible place for them to hear it. I don’t remember an opportunity to present a program where participants weren’t thankful to have access to information.

An attorney I spoke with recently implored me to call on large law firms, to help their retention efforts by offering new associates basic financial and investing information. In the past, I have witnessed employees struggling to understand various options within their 401(k) plans, and was fortunate enough to have been part of an effort to help de-mystify those choices for numerous corporate-sponsored groups.

As a workplace benefit, it’s a wonderful perk. Really though, it’s a sign of the times that finances: budgeting, saving, and investing, have become more complex and more important in our era of legislative uncertainty and government fiscal irresponsibility.

Years ago, our model for retirement was a three-legged stool. One leg was our Social Security system, which we now understand to be in peril, if for no other reason than the worker to retiree ratio has drastically changed. Another leg, corporate pensions, has all but gone the way of the dinosaur. Once a hallowed benefit, for those receiving or expecting to receive pension checks, it has become not uncommon for promised payments to be reduced. The final leg was our own savings. This too, while up from historic lows, has been insufficient in the final analysis.

Let’s take a more in-depth look at the three legs. Social Security, long considered the third rail in American politics, is in severe trouble. This, we know. Unfortunately, the impending tough choices, both from personal and political stances, have been forecast for years. Established in 1935, Social Security became the safety net against the vicissitudes of life. Still recovering from the Great Depression, the country needed a safety net, and with the number of workers actively participating in the system, numerically, Social Security made sense. By 1964, it was a political hot potato for Barry Goldwater.

Kicked down the road since then, with an occasional shout out for change, the problem has been allowed to fester. Simply stated, there are not enough workers contributing into the system today to allow for the maintenance of payments, without either increasing Social Security taxes, reducing promised payments, or increasing a recipient’s minimum age. And not just small adjustments to the foregoing, but large adjustments. Without major reconfiguring, this leg is headed for collapse.

Our second leg, the pension plan, has all but been replaced by some sort of employee or employee and employer contribution plan. It’s not that many employees do not have access to these types of plans in the workplace. It’s that by virtue of contributing to their own retirement via workplace programs, it diminishes funds available to save privately. Our old “defined benefit” plans have been replaced by “defined contribution” plans. Yes, it’s true, when a company matches an employee’s contribution, that’s a help. It’s just that ultimately, the onus of responsibility has grown increasingly to that of the individual.

Our third leg, then, is already under attack from all of the other requirements of modern life. While the average debt load as a percentage of income has steadily declined since the Great Recession (2008), the opposite is true for the cost of providing staples of American life. Food, transportation, education, utilities, and medical care have steadily increased since that time. A recent survey by Northwestern Mutual, found that some 40% of Americans with debt are spending up to half of their monthly income paying it back. Our collective credit card debt has hit 1.1 trillion, according The Federal Reserve. It is no wonder, that so many (21%) report not saving anything at all.

Since outliving our nest egg continues to be one of our most pressing concerns, hat’s off to those organizations leading the charge to provide workplace financial programs.