by Jon Cochrane
Children want to feel included. It starts on the playground and grows as their social circles widen. A way adults can help foster financial inclusion is by helping them develop an understanding of money, budgeting and saving, early in their lives.
April is National Financial Literacy Month and teaching children about the importance of money management is the goal of the American Bankers Association’s Teach Children to Save Day on April 20.
Developing financial capability is essential for financial inclusion as children become adults. It is necessary for effective day‐to‐day cash flow management, planning for the future, and use of financial services. The stakes are especially high for people in low and moderate income communities, as sound financial decisions can have life-altering effects.
It’s important to lay a strong financial foundation early. Unfortunately, families cannot depend on schools alone to sow these seeds.
According to the Council for Economic Education, Alaska is one of only five states that do not require personal finance education in state standards, leaving our young people woefully unprepared when it comes to understanding finances. This lack of financial education is showing up in financial literacy test scores.
A recent national financial literacy test administered to more than 10,000 students aged 15 to 18 revealed an average score of 60 percent proficiency. Additionally, in three separate surveys, students chose money management as a high school-level course that would benefit their lives the most, according to the National Financial Educators Council (NFEC).
There are simple tips and tools available to help adults prepare children for a healthy, lifelong relationship with money. For instance:
•Show younger children where money comes from and how to keep it safe. Talk about ways to earn money. Show them your paycheck and take them to the bank while you make a deposit or let them watch you make a mobile deposit to help keep it safe when you’re not using it.
•Demonstrate ways to earn money and save it. Develop a chore chart and an allowance. Help them determine what they would like to save their own money to buy and how long it will take.
•Help tweens set financial goals. Help your tween identify their spending goals and dreams. Give them tips for sticking to a saving and spending plan.
•Help teens learn how to boost their earning power. It’s a fact — people with higher education and more skills earn more money on the job than those with less education and fewer skills. Help your teen start planning now. Education will be the most important factor, but skills like those in computers or languages, math and science, or writing do matter.
•Help your child understand the difference between needs and wants.
Financial Literacy Month is the perfect time to have the “money talk” at home. You can check out Wells Fargo’s fun, interactive and free Hands on Banking program. The non-commercial online curriculum is easy to use and lessons are specifically tailored by age group. (There are lessons for adults as well.)
These are just a few of the ways you can get started. Whichever methods you choose, start now. Your child’s financial future is at stake. Getting them on the road to financial success now can increase the likelihood that the ride has as few bumps as possible.
Jon Cochrane is Wells Fargo Bethel branch manager. You can reach him at 543-3875 or [email protected].