The links between kids who don't understand money basics and problems in their young adult life are compelling. Lois Vitt, a financial sociologist who founded the Institute for Socio-Financial Studies, is a heavyweight in the field of financial education. She has concluded that money smarts in young adults mitigates family violence and saves lives.
She isn't alone. Another prominent expert is Robert Manning, author of Credit Card Nation, who insists that teen financial pressures often go unnoticed by parents and may lead to suicide. Much of the evidence is anecdotal.
Manning tells the story of a 21-year-old young man who takes his own life after piling up credit card debts:
"Sean O'Donnell was a National Merit semifinalist, a smart guy. And he got embroiled in credit cards, enjoyed campus life, and he took on more jobs to pay it down. He dropped out of school. He moved home. He paid it down. He was going to pawnshops, trying to keep up with his credit cards. And he thought his career as a lawyer was going to be over now that he had dropped out of school, and he literally took his own life."
Yet the anecdotes are starting to pile up. Following a three-day personal finance seminar for men and women serving in the Navy, Vitt interviewed mid-level officers aged 20 to 30 and asked them about family violence stemming from financial problems among the 18-to-24 year-old sailors they supervise. How much verbal and physical abuse in the homes of these sailors was due to financial stress, she wanted to know. Here is a sampling of responses:
- "I would have to say about 90% of it."
- "A whole lot. About 60% or 70%, no about 90%."
- "People get stressed out and they want to kill themselves. You know, kill their wives or kids or whatever."
- "In my house, about 85% and around the holidays it's really bad."
Vitt is quick to note that the military experience cannot readily be projected onto a general population of young adults. "They're being trained to go into combat," she says. "The typical person coming out of the high school is not being trained to go into combat. So we don't know how that training affects the potential for family violence under stress."
On the other hand, there are an awful lot of similarities. Whether a young person goes into the military, gets a job or goes to college they are coming from the same educational system. "We know they are not prepared in high school for personal finance issues," says Vitt. "And now (those who do not go to college) are getting a paycheck for the first time and they're being told that they need to save for the future. Suddenly they have grown-up responsibilities and some of them don't know how to handle it."
Meanwhile, there are plenty of factors that should make managing money less stressful for military families. They get a housing allowance and are provided with insurance and other benefits, like job security, that is rare for kids right out of high school. And they have no college loans. Arguably, young military families should have less financial stress, not more.
So I'm willing to project Vitt's findings onto the general population, even if she isn't. Financial stress leads to problems and sometimes to violence in young households. We owe our kids a financial education, and because our government won't mandate it and our schools have been slow to take up the issue on their own it is up to the Bank of Dad to teach this stuff at home.
Photo courtesy Flickr user rickharris
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