It is easy for young people to put off thinking about financial decisions, such as buying a house or saving for retirement, until they become an immediate priority. Indeed, it is probably very normal for these decisions to be secondary to the more immediate financial priorities in a young person’s life – finding a job, balancing a monthly budget, and especially paying off student debt.

But today’s 20- to 30-year-olds need guidance when it comes to all of these decisions – the ones that will have an effect in the near term and seemingly distant future. Traditionally, what guidance there was for young people came from their parents, but increasingly that is not enough.

Based on my research, I believe the greater number of young people graduating with higher levels of student debt, coupled with easy access to credit and an increasingly complex financial system – one that puts more onus on individuals, rather than their employer or government, to safeguard savings and future income – means young people need a more in depth understanding of how to manage their personal finances.

In my opinion, the best way to give them this understanding is through a mix of mandatory education and automatic saving, as well as behavioural incentives. Young people need to be convinced that they should learn these things, but mandatory counselling for anyone who receives a student loan or financial literacy curriculum in schools is important to make sure the basics are covered.

Developing mandatory programs should be the easy part. More challenging will be affecting young people’s behaviour. Professor Saul Schwartz believes removing the choice to spend through automatic saving is the best way to change behaviour, which I think could work in some cases. But more powerful would be a demographic of informed young people who understand why it is important to save and are motivated to do it. Automatic saving does not absolve a person from the responsibility to stick to a monthly budget or not get buried in credit card debt. If automatic saving can be a helpful tool, it should be paired with knowledge as well.

Campaigning for financial literacy

I believe changing attitudes and behaviours can actually be done through a simple, long-term campaign. Young people are aware that managing money is important, but I don’t think many really understand the risks they run if they do things that are seemingly innocuous for a young person with few immediate responsibilities. A campaign of TV, Internet and even bus stop ads to clearly explain what a credit score is, how to maintain a good one, and what can go wrong if you don’t, would go a long way. Showing personal stories of young people’s financial success and failure will show the real life benefits of managing your money responsibly, even at a young age. Click here to view the impressive example of money management success I found.

It might seem naïve to hope slogans and stories can actually change behaviour, but I believe it is an important first step to changing social attitudes.

At your service, on campus

To back this up, I think universities and colleges should be required to offer and advertise financial advice services. At the University of Waterloo, where Rick Kim attended, director of financial aid Maureen Jones says students can sit down with a financial aid officer and receive personalized advice on how to manage their income and loans to afford tuition and living expenses. The problem is, many students don’t use this service, or don’t come to the financial aid office until they are already behind on payments.

If more students knew about and used these services, even those without student loans, it would be a great way for them to find the personalized advice that they otherwise would have to pay a lot for through private financial advisors. Unlike private financial advisers or ones at bank branches, university or college financial aid officers should not have a conflict of interest or bias.

Forcing the issue

The Task Force on Financial Literacy’s recommendation for mandatory counselling for university and college students who receive government student loans is the best of the task force’s suggestions regarding young people. This would mitigate the “easy money” effect credit counsellor Norah Foster laments and would also correct for the lack of knowledge that is clear in university students who don’t even know when interest begins to accrue on their loans.

Mandatory counselling, as well as perhaps mandatory classes for all college and university students, would ensure that these students, who would have missed the curriculum now in place in several provinces’ elementary and high schools, receive base-level financial training.