Despite the fact that Snoop Dogg may not be the most prominent role model for our young adults, this title displays that everyone needs to be engaged with his personal finance. Unfortunately, numerous academic studies illustrate that multiple generations of young adults are (or have been) worried about their current financial situation and encounter problems with their personal finance. There already exists a term for this phenomenon: “Financial illiteracy”.
Financial illiteracy is defined as lacking the personal skills to understand, analyse and administer your personal finance. The term can be expanded to having an insufficient amount of necessary knowledge to handle financial challenges or decision in daily life. And that is exactly where the buck stops for young adults. Numerous international studies demonstrate that young adults have difficulties with passing all sorts of financial literacy tests.
Three noteworthy and slightly alarming conclusions emerge when the results are being analysed:
We don’t need no education… Uhm, yes you do! (Pink Floyd)
There is an overwhelming shortage of knowledge when it comes to young graduates their personal finance. Young adults do not get any ammunition when they are cast for the lions in their young independent life. They are supposed to know how to handle all sorts of financial and administrative obligations, while they have been abandoned by their high school educators. It is clear that the education system has dropped the ball. This is not only the case in Belgium, also international studies point out the lack of financial education towards young adults. These studies confirm that teaching student financial responsibility has a significant positive effect on their financial awareness and behaviour. A better education in the basics of administration and financial insights may lead to better budgeting and less overconsumption.
2. Spending all your money on me… No, you shouldn’t! (Black Eyed Peas)
The lack of education and experience is reflected in the observed financial behaviour of young adults. It is clear that the amount of income is not the biggest problem for young adults, but rather the spending of it is. Compared to older age groups, young adults overspend on consumption goods, while they do not consider savings or investments enough.
3. You better work… young adult! (Britney Spears)
Despite the fact that Britney Spears may even be a worse role model than Snoop Dogg, she does incorporate a very strong message through one of her hits. With work experience, you are one step ahead on your peers and closer to your personal goals. In addition to earning your first wage, a good job results in numerous advantages in terms of personal development. Academic literature shows that young adults with multiple years of work experience score way better regarding financial literacy than peers who did not work yet.
What's ROOV got to do with it? (Tina Turner)
It may be clear: feeling financially unconfident is nothing to be ashamed of, allow us to help you overcome your struggles.
ROOV is a personal financial administration app which integrates banking, personal finance, budgeting and cost comparison on one platform. The application is specifically trained to help you save money, while the functionality remains very easy.
ROOV even enables financial inexperienced users to efficiently manage their administration in a digital archive. Easy, safe and always accessible! Moreover, ROOV gets rid of questions such as: “Where did my allowance or student wage go?”, by providing a personal graphically attractive overview of your income and expenses.
In order to further optimise ROOV to the needs of young adults, our team works together with Master in Banking & Finance students of Ghent University. If you want to help build your personal financial administration application of tomorrow, be sure to fill in the survey below (in dutch) and get a chance to win one of the 5 Lifetime Premium subscriptions. The winners will be contacted on 30 June 2021.
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