James Harden of the Philadelphia 76ers looks for a pass against the Toronto Raptors in Game 5 of the Eastern Conference First Round on April 25, 2022.
Tim Nwachukwu | Getty Images
For NBA player James Harden, building financial literacy in young adults is personal.
Harden, a point guard and shooter who recently signed a two-year, $68.6 million contract with the Philadelphia 76ers, remembers being a 20-year-old rookie in 2009 on a suddenly large salary. As the first 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 whatever.”
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But Harden must have learned about money matters on the fly.
“For me, it was about learning not just how to save, but how to make smart investments,” Harden said. “You may have money in a bank account or in savings, but for longevity your money needs to work for you while you sleep.
“It’s something I learned.”
Harden’s nonprofit covers the cost of the online course
To reach young adults who could benefit from money education, Harden’s Impact 13 Foundation partners with financial advisor Jordan Awoye, managing partner of Awoye Capital in Babylon, New York, for what is featured as a “financial literacy tour”.
The initiative involves connecting with various colleges, where Awoye meets small groups of students to talk about life and finances, and gives them access to an online personal finance course that they can take at their leisure. . Through scholarships, Impact 13 covers the $795 license cost of the online course – developed by Awoye – which covers topics such as budgeting, debt, credit and investing.
“I think coming from where I come from and where I am now – coming to the NBA, being there for 14 years and seeing how the money is handled – it’s more than necessary to allow Jordan and people like me to explain and show how to handle money,” Harden said.
The NBA star could make surprise visits to some of the seminaries, said Awoye, who 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, according to research. According to a study by FINRA’s Foundation for Investor Education, people who scored above the median on a seven-question financial literacy quiz were more likely to make ends meet than those whose knowledge -Financial doing is more limited.
For example, those who scored higher on the quiz spent less than their income (53% vs. 35%) than those who did less well, and they set aside three months of emergency funds at levels higher (65% versus 42%) . They were also more likely to have planned for the future by calculating their retirement savings needs (52% versus 29%) and opening a retirement account (70% versus 43%).
With many young people across the country reaching adulthood with a lack of knowledge about money matters, some state legislatures have passed laws requiring public school systems to teach personal finance. Fifteen states guarantee, or have pledged to guarantee, that all high school students will take a stand-alone personal finance course, according to Next Gen Personal Finance’s 2022 State of Financial Education Report. Other states have integrated the program into another class (i.e. economics) or offer it as an option. Still others have no personal financial requirements.
Meanwhile, Americans are carrying $890 billion in credit card debt, which comes with average interest rates over 18%. Additionally, 56% of American adults would be unable to cover an unexpected $1,000 bill with accumulated savings, according to a Bankrate survey.
In other words, there is a lot of room for improvement when it comes to financial literacy.
For Awoye, his interest in improving financial literacy is a matter of “if only I knew then what I know now,” he said.
“Once I started doing well in wealth management, it really started to become one of my missions to help with financial literacy,” Awoye said.
“If we can give that to the next generation, everyone will be better off for it,” he said.