Personal finance expert Ric Edelman cautions that the U.S. is neglecting its youngest investors.

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One of the most recognized names in personal finance is urging Americans to increase their financial literacy and to improve the education provided in this area. "We spend a lot of time trying to improve financial literacy. We stink at it," said Ric Edelman, founder of Edelman Financial Engines, on this week's CNBC "ETF Edge." 

Edelman believes the problem lies in the U.S. not having a strong tradition of promoting smart personal finance. He emphasizes the urgency of improving this situation, especially considering the increased life expectancy of individuals today. This trend heightens the risks associated with running out of money in later life and raises questions about traditional investment models for long-term financial security, such as the 60-40 stock and bond portfolio. "We are the first generation, as baby boomers, that will live long lives as part of the norm," Edelman stated. "Everyone before us, our parents and grandparents mostly died in their 50s and 60s. You didn't have to plan for the future because you weren't going to have one," he added.

One of his major concerns regarding the current generation of young investors is their inclination towards get-rich-quick schemes. Edelman feels that many new investing platforms have been overly supportive of risky strategies, enticing young investors into financial gambling instead of true investing. Options and zero-day options have surged in popularity over the last few years. According to data from the New York Stock Exchange, participation in the options market by retail traders neared 50% in 2022, with options volume reaching an all-time high in 2024.

Edelman advises younger generations to be cautious of a corporate landscape that complicates consumer finance. This includes the creation of overly sophisticated and costly financial products. "They want to make it complex, to make you a hostage rather than a customer," he remarked. He also encourages young investors to ensure they are obtaining information about personal finance from reliable sources. "When so many are getting their financial education from TikTok, that's a little scary," he said.

Edelman points out that the odds are against young investors due to the absence of mandated personal finance courses in high schools. "The only way we discover the issues of money is through the school of hard knocks as adults, and we're over our heads when it comes to buying a car, getting a mortgage, insurance, and saving for college," he noted. 

However, this scenario is improving for future generations. Utah was the first state to require a personal finance course for high school graduation in 2004, and by 2021, 11 states had followed suit. As of this year, 27 states now mandate that high school students complete a semester-long personal finance course before graduation, according to Next Gen Personal Finance.

Another significant challenge for young investors is their limited financial resources, as many recent college graduates struggle to manage bills and have little left to save for other financial goals. Still, there is reason for optimism regarding younger Americans, according to Edelman: they are highly motivated to achieve financial success. "Today's youth looks at their parents and sees how poorly they were prepared for retirement. They don't want that to be their future," he said.