Bloomberg News – Natalie Kitroeff
“Learning the basics of personal finance is not enough to secure your financial future, a new study shows. Instead, get a savings account, fast. Millennials who had experience with savings accounts are more likely than people with just a financial education to have money at the ready for emergency expenses, and they were less likely to rely on high-cost loans or have excessive debt, according to research from the University of Kansas. The findings suggest that parents could spend more time encouraging their children to use financial concepts in practice, not just learn them, says Terri Friedline, one of the report’s authors. “The opportunity to put your knowledge into practice by having a financial product may help to move the needle in terms of financial outcomes,” Friedline says, adding that research suggests kids as young as five years old can start learning about savings. “They can learn and grasp financial concepts.” For the analysis, researchers looked at how nearly 7,000 people ages 18-34 responded to a set of financial questions in a 2012 Financial Industry Regulatory Authority survey. The researchers categorized people based on whether they took personal finance classes in college, in high school, or at work, and whether they lived in households with a savings account. The study’s analysts also controlled for a range of factors that might make someone more or less prone to financial problems, such as income, education level, and employment status.”(more)