Chapter 13. Teaching Young Adults About Money and Credit
Young adulthood brings many financial firsts. A person may begin earning a regular income, opening a bank account, paying rent, using a credit card, financing a vehicle, managing student debt, or saving independently. Decisions made during these years can affect future borrowing opportunities, housing choices, financial security, and stress levels.
However, many young adults enter this stage without a clear understanding of budgeting, banking fees, credit reports, credit scores, interest, or debt repayment. Banks and credit unions can help close this financial-knowledge gap through accessible, practical, and responsible education.
The objective should not be to promote a particular account or credit product. Effective financial education helps young adults understand their choices, recognize potential costs and risks, and develop habits that support greater financial confidence.
Begin with Everyday Money Management
Credit education is most useful when it is connected to basic money management. Before discussing how to obtain credit, an institution can help young adults understand how to manage the money they already have.
Useful introductory topics may include:
- Distinguishing income from available spending money
- Creating a basic monthly budget
- Separating needs from wants
- Tracking recurring subscriptions and automatic payments
- Building an emergency fund
- Understanding checking and savings accounts
- Reviewing account balances and pending transactions
- Recognizing overdrafts and insufficient-funds situations
- Using debit cards and payment applications safely
- Setting financial goals
Examples should reflect real-life decisions. A young adult may need to determine whether an apartment is affordable, how much to reserve for taxes from freelance income, or whether a monthly subscription still provides value.
The Consumer Financial Protection Bureau provides resources specifically for teenagers and young adults covering earning, saving, planning, shopping, borrowing, and protecting personal information. Its guidance recognizes that young people begin earning money and making increasingly independent financial decisions during this stage of life. The CFPB offers money-management resources for teenagers and young adults.
Explain How Credit Works
Young adults may hear that they need to “build credit” without understanding what that means. Financial institutions can explain that a credit history develops from information reported about borrowing and repayment activity. Credit reports and credit scores may be considered by lenders and can influence access to certain financial products and the terms offered.
Education may address:
- The difference between a credit report and a credit score
- Factors that may affect credit scores
- The importance of paying bills on time
- Credit utilization and available credit
- The effect of applying for multiple accounts
- The consequences of missed or late payments
- How long certain information may remain on a credit report
- How to review reports and dispute possible errors
- Why closing an account may affect credit differently depending on the circumstances
Representatives should avoid promising that a particular action will increase someone’s score by a specific number of points. Scoring models, account histories, and individual circumstances vary.
Teach Responsible Credit-Card Use
A first credit card can provide convenience and help establish credit history, but it can also create expensive debt when used without understanding interest, fees, and repayment obligations.
Young adults should learn the difference between a statement balance, minimum payment, available credit, payment due date, and annual percentage rate. Paying only the minimum amount may extend repayment and increase the total interest paid. Cash advances, late payments, foreign transactions, and balance transfers may involve additional costs.
The CFPB recommends helping young people compare both the costs and potential benefits of credit cards, including interest, fees, convenience, security, and spending records. Its credit-card education resource encourages comparison before using credit.
Education should also address store cards, buy-now-pay-later services, vehicle loans, student loans, personal loans, and cosigning. A convenient payment arrangement is still a financial obligation. Young adults should understand the complete cost, repayment schedule, consequences of missed payments, and effect on their monthly budget before borrowing.
Discuss Credit Mistakes Without Creating Shame
Some young adults may already have missed payments, collections, excessive balances, or identity-theft problems. Education should be constructive rather than judgmental.
Institutions can explain general steps such as reviewing account information, contacting creditors promptly, organizing payment obligations, checking credit reports, and seeking help from an appropriate qualified resource. Representatives should not promise that debt can be eliminated, a score can be repaired quickly, or negative information can always be removed.
A respectful approach makes it easier for young adults to ask questions before a manageable problem becomes a larger financial difficulty.
Address Fraud and Identity Protection
Young adults frequently use mobile banking, digital wallets, peer-to-peer payment services, online marketplaces, and social media. Financial education should help them recognize phishing messages, fake job offers, account-verification scams, fraudulent payment requests, identity theft, and impersonation of financial institutions.
Practical guidance may include protecting passwords, enabling multifactor authentication when available, reviewing transactions, setting alerts, safeguarding personal information, and contacting a financial institution through an independently verified channel. Young adults should also understand that payments sent through certain applications may be difficult to recover.
Reaching Young Adults Through Sanj Talks
Sanj Talks can help banks and credit unions share approved financial education with young adults through articles, interviews, videos, community conversations, college or career-readiness programs, local events, sponsored guides, and customized financial-literacy initiatives.
An institution might provide an authorized financial educator for a discussion about building credit, sponsor a young-adult money guide, or participate in a community panel about banking, budgeting, student debt, and first financial decisions. The FDIC’s free Money Smart program also offers educational resources designed to strengthen financial skills across different age groups. Financial institutions can review FDIC Money Smart resources.
The institution’s participation may be acknowledged, and approved contact information can be offered to those who voluntarily want to learn more. Participants should not be pressured to open an account, apply for a credit card, or obtain a loan.
All educational content, speakers, disclosures, promotional materials, and sponsorship acknowledgments should receive necessary legal, compliance, fair-lending, marketing, brand, and executive approvals. Sanj Talks participation should not be presented as an endorsement of a bank, credit union, account, credit card, loan, or financial product.
When financial institutions teach young adults how money and credit work, they provide knowledge that may remain valuable for decades. Clear education can help young people avoid preventable mistakes, establish responsible habits, and approach future financial decisions with greater confidence.
Questions for Your Institution
- Which money and credit topics do young adults in your community most need help understanding?
- Can your institution explain credit reports, credit scores, interest, and fees in accessible language?
- How will your program connect credit education with budgeting and everyday money management?
- Which fraud and identity-theft risks should young adults recognize?
- Who is qualified and authorized to provide this education?
- How will your institution keep financial education separate from product promotion?
- Which Sanj Talks opportunity could help your institution reach and educate young adults responsibly?
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