In a recent Time.com article, Federal Reserve Chairman Ben Bernanke said kids today will be better off financially than their parents if they take personal responsibility and become more financially astute. If they don’t, they will likely face challenges as they grow older.
Bernanke goes on to say that “financial education is a ‘lifelong undertaking.’ ”
This is so true. The ability to make sound financial decisions is an advantage no matter what stage of life you are in, and it is just as important as learning basic academic skills such as reading and math. Because financial products and your financial needs change, you must continue to build on these basic skills throughout your life.
Teaching students to become money-smart consumers is essential in this economic climate. Kids should learn basic concepts such as budgeting and saving, plus more involved financial concepts like evaluating loans, credit report information and mortgage issues because they will use these skills in everyday life.
What is promising is that several Kansas school districts have made financial literacy a requirement for graduation, indicating education institutions recognize money management is crucial for students to learn.
Local and state organizations also recognize the importance of financial literacy. The Kansas State Treasurer’s Office partners with Kansas credit unions to offer Money$mart Camps geared toward middle school students, and the Save@School program targets elementary school children. These programs and others reach nearly 6,000 students in Kansas each year. Other organizations and financial institutions offer financial literacy training, seminars and workshops, all which have a positive impact on our kids’ financial lives.
But it may not be enough.
Recent surveys and statistics regarding consumer financial health are grim.
A recent report by the Corporation for Enterprise Development found 43 percent of U.S. households are one crisis away from living in poverty. A growing number of families have no savings to help them through a job loss or medical emergency, and only 30 percent of Americans save their money.
A Consumer Federation of America and Certified Financial Planner Board of Standards Inc. survey found 38 percent of those surveyed said they lived paycheck to paycheck and less than 30 percent indicated they felt comfortable financially.
A JumpStart Coalition report found that when tested on money management knowledge, high school students answered fewer than 50 percent of questions correctly.
And let’s not forget the average $20,000 debt college students are left with when they graduate.
How can we teach our children when we, as adults, are struggling?
The first step is to take financial literacy seriously. Make it a priority in your household.
Prepare a budget and stick to it.
Start slowly. Take one concept at a time. A complete overhaul of your finances can seem daunting, but if you break it down into little pieces, you will learn more and become comfortable with your money management skills.
Get help if you need it. Consumer credit counseling might be a good place to start. Many financial institutions like credit unions and community banks offer financial literacy assistance.
If your children are old enough, learn together. It will improve your household financial knowledge and may even strengthen your relationship with your kids. If you are a business owner, and an employee is struggling financially, help them find resources to get them back on track. Not only will you help them improve their household finances, but it will ease stress and make them a more productive and healthier worker.
If your finances are healthy and you have a good understanding of money management, start teaching. Young children can grasp simple concepts like money buys things, and you earn money by working. Always involve your children and show them how much things cost, and how that latest gadget or eating out affects your household budget.
Financial literacy is not a “learn it and forget it” skill. What you learn about budgeting, saving or retirement can build and complement your financial health.
Your financial knowledge helps you no matter where you are in life. It can help you live better and healthier, and ensure your children have a better, healthier future.