Financial Literacy: Not Just a Buzzword for Millennials

March 3, 2016

Financial literacy can, unfortunately, often-times be found in the same category as other over used words such as innovation and disruption, but the reality of the situation is quite different. Financial literacy, education, and effectively communicating the importance of financial literacy cannot be overstated, particularly as it pertains to millennials and young professionals early in their careers. The ramifications of poor financial decision making and planning can have consequences that resonate both on a day-to-day basis as well as for years down the road. In addition to the personal consequences of poor financial decision making it is also important for millennials to recognize the ramifications that a lack of financial literacy and planning can have on professional development.

Specifically, as it pertains to millennials and young professionals there are several events and items, both personally and professionally, that are special importance with regards to financial health and literacy. The following list is by no means an exhaustive compilation of all the areas that millennials should focus on, but merely some of the more high-profile thoughts and ideas that can impact financial health in a big way. It is important to always remember that the financial decisions and choices made early on can have ramifications for years to come.

  • To 401k or not to 401k? – After getting a job, new employees usually spend the first few days of employment getting some sort of job and benefit orientation. In addition to the on-site orientation there is usually a folder of information handed out to the new employee, which includes physically available information as well as links to websites with more data. Instead of simply placing the folder on the counter at home, it is important to take a look at the 401k options, fees, and providers offered by your organization. 401k matching, of any percentage, represents funds contributed on your behalf by your employer, and I always ask people – where else can you receive a guaranteed return on your investment?
  • Planning and organizing your finances – Millennials are often referred to as the most educated and technologically savvy generation when compared to other generations in the workforce, and this should be leveraged and applied to personal finances and financial planning. Whether a person prefers having all of their finances available on their phone or tablet, or prefer doing it using more “offline” methods and tools, there is no shortage of resources and tools to be utilized. Millennials are often categorized and described as being constantly plugged in, why shouldn’t the same attention and connectivity used for Swarm and Snapchat be turned to monitoring financial health?
  • Think of it as a workout – Building a financial plan is not something that can be accomplished overnight, and it is not something that should be approached with anything less than 100% focus. Akin to building an exercise program, or trying to eat better and improve your physical fitness, building a financial plan and improving your financial plan can, and should be, thought of like a workout plan. Establish a routine, make it a part of your daily routing, and get a budget buddy. Every journey is more fun with a partner or team to back you up.

Financial literacy is not a buzzword or throwaway phase; it is something that really should be part of an everyday routine and thought process. A common question is where to start, and what resources are available that are unbiased and supported with high-quality information. The American Institute of Certified Public Accountants has some great resources that are freely available to the public, as well as being verified and vetted by Certified Public Accountants. Specifically, http://www.feedthepig.org/ and http://www.360financialliteracy.org/ have tools and information that can be used by everyone, and easily built into your personal financial process.

 


Written by: Sean Stein Smith
Financial Analyst - Joint Venture Finance at Hackensack University Medical Center
http://www.hackensackumc.org/

Dr. Sean Stein Smith, DBA, CPA, CGMA, CMA, CFE is a Financial Analyst - Joint Ventures, at Hackensack University Medical Center, one of the premier health care providers in the United States. Sean is a member of the Editorial Advisory Board of NJCPA Magazine, and has been featured in Accounting Today, Strategic Finance, IndustryWeek, Accounting Web, the CPA Journal, NJCPA Magazine, and numerous other academic and practitioner publications. Sean has been selected as one of the NJCPAs "30 under 30" for 2015, and is an adjunct professor at both Fairleigh Dickinson University and Montclair State University, where he has taught and developed courses ranging from personal finance, accounting, corporate governance, and ecological economics. He is also serving his inaugural term on the AICPA's National Commission on Financial Literacy. Sean was also selected as one of the inaugural member of the Silberman College 50 under 50 Business Alumni Leaders in 2015. Also, Sean was selected to participate in a young professional leadership experience with the Institute of Management Accountants (IMA), including participating in Board level committee meetings, as well as the general meeting. In addition to his writings for industry journals Sean has also been published in multiple academic journals for his research on integrated financial reporting. His dissertation "Effect of Integrated Financial Reporting on Financial Performance" compares the financial performance of publicly traded organization that utilize an integrated financial reporting versus comparable organizations that do not.

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