For NBA player James Harden, boosting financial know-how among young adults is personal.
Harden, a point guard and shooting guard who recently signed a reported $68.6 million two-year contract with the Philadelphia 76ers, remembers being a 20-year-old rookie in 2009 with a suddenly sizable salary. As a first-round draft pick — third overall — he had just signed a two-year contract with the Oklahoma City Thunder worth $4.76 million, according to Spotrac.com.
“You want to buy everything,” Harden told CNBC in a phone interview. “And you deserve it, so you buy your first car, your first house or whatnot.”
But Harden had to learn about money matters on the fly.
“For me, it was learning how to not just save, but how to make smart investments,” Harden said. “You might have money in a bank account or in savings, but for longevity, your money’s got to be working for you when you sleep.
“That’s something I’ve learned.”
Harden’s nonprofit covers cost of e-course
To reach young adults who could benefit from learning about money matters, Harden’s Impact 13 Foundation is partnering with financial advisor Jordan Awoye, managing partner of Awoye Capital in Babylon, New York, on what is billed as a “financial literacy tour.”
The initiative involves connecting with various colleges, where Awoye meets with small groups of students to talk about life and finances, and gives them access to a personal finance e-course that they can complete at their leisure. Through scholarships, Impact 13 is covering the $795 cost of licensing the e-course — developed by Awoye — which covers topics such as budgeting, debt, credit and investing.
“I think just coming from where I’m from and where I am now — making it to the NBA, being there for 14 years and seeing how money is handled — it’s more than necessary to allow Jordan and people like me to explain and show how to manage money,” Harden said.
The NBA star could make surprise visits at some of the seminars, said Awoye, who has visited six institutions — including Towson University in Maryland and Norfolk State University in Virginia — as part of the tour.
Understanding how to manage money makes a difference, research shows. People who scored above the median on a seven-question financial literacy quiz were more likely to make ends meet than those whose money know-how is more limited, according to a study from FINRA’s Investor Education Foundation.
For example, those who scored higher in the quiz spent less than their income (53% versus 35%) than those who fared less well, and they set aside three months’ worth of emergency funds at higher levels (65% versus 42%). They also were more likely to have done some future planning by calculating retirement savings needs (52% versus 29%) and opening a retirement account (70% versus 43%).
With many of the country’s youth reaching adulthood with a lack knowledge about money matters, some state legislatures have passed laws requiring public school systems to teach personal finance. Fifteen states guarantee, or have committed to guaranteeing, that all high school students will get a stand-alone personal finance course, according to Next Gen Personal Finance’s 2022 State of Financial Education report. Other states have the curriculum baked into another class (i.e., economics) or offer it as an elective. Still others have no personal finance requirement at all.
Meanwhile, Americans are shouldering $890 billion in credit card debt, which comes with interest rates that average more than 18%. Additionally, 56% of U.S. adults would be unable to cover an unexpected $1,000 bill with accrued savings, according to a Bankrate survey.
In other words, there’s room for a lot of improvement when it comes to financial literacy.
For Awoye, his interest in boosting financial knowledge is a matter of “if only I knew then what I know now,” he said.
“Once I started to do well in wealth management, it really started to become a mission of mine to help with financial literacy,” Awoye said.
“If we can give that to the next generation, everybody will be better off for it,” he said.