Research shows that many young adults are hungry for financial freedom. But, they’re just not sure how to get there.

A major roadblock is not having enough information about managing money, especially when it comes to navigating the tricky world of credit. That’s according to a recent survey from Bread Financial. As loads of fresh graduates step into the real world, they might find themselves years away from truly standing on their own two financial feet.

So, what’s the solution here? How can parents and educators help these students become money-savvy and go off to college and careers in a better financial situation than when they arrived?

Why Personal Finance is Essential Learning

Although loads of students are eager to boost their money skills, they’re just not getting the help or tools they need to become financial pros. Bread Financial’s research revealed that, while many young people want to manage their money effectively, including making a budget and investing, most are at a loss for where to start.

Some lucky college grads got a crash course in finances while in school and are keeping their monetary goals in sight as they enter the job market. Yet, only a third of them claim they learned how to budget during their college years. Even fewer students (26%) picked up essentials like how to balance a checkbook. This signals a misstep on the part of many states and institutions when it comes to instilling the basics of financial literacy.

A major hurdle for this new generation is the absence of education about the ins and outs of finances, especially the correct way to use and build credit. 43% believe that just having a full-time job, maxing out their credit cards each month (21%), and applying for multiple credit cards at once (18%) will boost their credit scores (all incorrect, for the most part). Plus, nearly a quarter of this year’s grads have never even applied for a credit card.

Every individual’s financial situation is unique, and there’s no magic formula for building credit. Generally, the longer a person’s credit history shows a pattern of timely payments, the more likely they are to increase their credit score. The snag, though, is that many young people find it tough to get approval to start building their credit history in the first place.

Financial Literacy is Key

Nick Antonelli, CMO at Bread Financial, suggests several strategies for starting to build a solid credit score. One of the earliest moves can be to hop onto a parent’s card (or a spouse or partner) as an authorized user to kickstart your credit history. Once that’s set up, you can consider applying for your own credit card. From there, a few basic practices can help boost your credit— like making sure you pay your bills every month.

For those new to the world of credit, how much of your available credit you use can also significantly impact your credit health. This is what’s called a “credit utilization ratio.” Try to keep your credit card balance below 30% of your limit and consider setting up auto-pay so you never skip a payment and risk a drop in your credit score.

Interestingly enough, TikTok is becoming a popular platform for Gen Z to pick up financial advice, especially if they find conventional tips a bit stale. A growing number of finance gurus are using the platform to simplify complex money concepts, including things like budgeting and investing. Keep in mind that one should take this advice with a grain of salt, though. Even if a piece of advice sounds reasonable, more research should be done before taking advice from strangers online who may not have your best interests at heart.

The takeaway here? We need to equip students with financial literacy tools and resources way before they toss their graduation caps in the air. As many young adults are discovering, life is a complex web of challenges, and personal finance is a big one that touches every corner of their lives.

The Bottom Line

Financial stress doesn’t discriminate. It’s a common thread that weaves through every generation. Digital-native Gen-Zers and the nostalgic baby boomers alike can feel financial pain.

About 32% of young adults are eager to cut the financial cord from their parents or guardians after college, but a nearly identical 31% are burning the midnight oil, stressed about this very goal. Why? Because student loan balances are starting to weigh heavily on Gen Z’s shoulders.

As droves of fresh college grads start their journey in the real world, many will find that it could take years before they truly achieve financial independence. A whopping 87% of the recent grads are banking on some financial assistance from their parents or guardians. More than a quarter (27%) expect this safety net to stick around for as long as they need it.

The ball is in the court of parents and educators to ensure that young people are equipped with the knowledge they need to make smart choices about their financial future. Add into the mix student debt, sky-high cost of living, inflation, and a slew of other economic concerns, and the need for financial literacy suddenly becomes very urgent.