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In the current financial crisis, children and youth are uniquely impacted by household finance complexities. Moments of financial trouble are teachable opportunities for children and youth to learn about personal finance and to improve their own money management skills. However, comprehensive strategies for educating them about personal finance have not yet emerged. This review of the literature explores the state of youth financial education and policy, including definitions and measures of effectiveness. Delineating a range of approaches to the delivery and assessment of youth financial education, this paper reports on impact data and best practices and highlights some controversies. It concludes with a discussion of the gaps in knowledge and suggestions for further research.
Key Words: financial literacy, personal finance, review of literature, youth financial education
Introduction
As we approach the close of the first decade of a new millennium, in the United States-and indeed, globally-society faces recession, rapidly rising fuel and food prices, a mortgage foreclosure crisis, increased bankruptcy filings, credit tightening, and a drastic decline in savings. The effects of these financial stressors for individuals, families, and communities have been widely reported in the media. These media reports discuss challenges and potential remedies for adults struggling with high rates of indebtedness, diminished incomes, negligible savings (including retirement planning), and a financial services marketplace replete with complicated product offerings. These reports also examine the implications of severe economic strain for children. However, comprehensive strategies for educating children and youth to be effective managers of money and successful navigators of a complex financial marketplace have not yet emerged from the dialogue and debate.
Although some effective strategies have emerged for adult financial education, these strategies and approaches cannot simply be reengineered down to more age-appropriate versions and imposed on a K-12 educational system. Adult financial education is largely a remedy imposed to fix specific critical breakdowns in how adults use (or misuse) money; it tends to be designed and delivered to target demographic groups and is frequently, though not always, intended to compensate for already-existing financial ordeals. Childhood financial education needs to be prescriptive, preventative, developmental, and delivered on a massive scale. Therefore, the pedagogies and strategies that are appropriate for adult financial education cannot transfer effectively onto efforts by the American school system...