Steve Skojec

Interesting article on the financial illiteracy of Gen X and younger. Scary too:

Today, people in their 20s and 30s are more educated than ever before. Some 85% of those aged 25 and older hold a high school diploma, and 27% have a college degree. This generation of adults is also, of course, the most technologically sophisticated to date, with about half using cell phones for text messaging and 90% on e-mail.

Talk back: Is Gen Y dumb or just lazy?

And yet stats indicate our generation’s financial literacy is abysmal, with personal finances to match. Only 52% of high school seniors passed a recent national financial literacy test, meaning adults entering the work force do not know enough about basic budgeting, interest rates or taxes to make sound decisions for their own lives. Quiz: Will you end up in your parents’ basement?

As a group, we have failed to get a grip on fiscal reality:

* The median credit-card debt of low- and middle-income people aged 18 to 34 is $8,200.
* The average college debt for recent grads is more than $20,000 and rising.
* People between the ages of 25 and 34 make up 22.7% of all U.S. bankruptcies (but just 14% of the population at large), according to a recent report.

Carmen Wong, the 30-something author of “Gener@tion Debt: Take Control of Your Money — A How-To Guide” and a former Money magazine staff writer, defends her age group. The problem is not lack of smarts, she says, but can be chalked up to an environment in which parents coddle their children, bank deregulation has made the financial landscape confusingly complicated and consumerism rules.

“We’re in a generation that was kind of shielded from a lot of financial responsibilities,” says Wong. “Twenty years ago, when you were in college you didn’t have a credit card, and (now) all of a sudden we had to take on debt to go to college. Then we get out of college and we have to have that handbag and an iPod,” she says. “It is so easy to take on debt.” One woman’s credit nightmare

She points out that salaries have been mostly stagnant over recent years, while expenses — especially health care and education costs — have skyrocketed.

“The financial landscape is dramatically different today — and yet financial education has not caught up,”

I would definitely say I fall into this category. I had high college debt, absolutely no education in budgeting or fiscal responsibility, and I didn’t even know how to balance a checkbook when I got out of school. My wife, who comes from an entrepreneurial background and has financial smarts that I don’t, took over the finances when we got married. I’m still pretty ignorant about all this stuff.

I’m naturally frugal, and can talk myself out of just about any purchase, so the fact that I’ve been working since I was 15 and never ran into trouble (until after I got married) is a record I’m pretty happy about. When it was just me, I could keep a running tally in my head of my bank balance, and I paid for most things in cash. When I had my semester in Europe in 1999, I showed up with $1500 in the bank and came home with $400 left, and I traveled to a different country every single weekend and took two ten-day trips.

It’s an aside to our general economic discussion, but not having the know-how on financial responsibility is where a lot of money gets wasted.