Former Federal Reserve Chairman Alan Greenspan once stated, “Financial education is a process that should begin at an early age and continue throughout life. This cumulative process builds the skills necessary for making critical financial decisions.”
We understand the importance of helping our community’s children and teens build a strong financial foundation so that they better understand basic concepts like budgeting, simple interest, and establishing and maintaining good credit.
According to the Council for Economic Education’s Survey of the States, only 30 states in the U.S. require high school students to take a course in personal finance and only 25 states require students to take an economics course. (Fortunately, Florida is one of the states that now requires a personal finance course for high school graduation.) While this is a marked improvement since the council’s first survey in 1998, there is still a big financial education knowledge gap.
FNBMD believes that financial education improves the financial health outlook for our youth and better prepares them to tackle unexpected financial situations or prepare for significant life milestones like paying for college, purchasing a home, opening a business, or saving for retirement. In fact, we’ve been working with Banzai, a national award-winning financial literacy program, to make curriculum available to Lake County schools at no charge.
Here are some good tips for teenagers and their parents to gain money management skills and prepare for the post-graduate workforce:
- Set SMART goals (Specific Measurable Attainable Realistic Trackable). Choose your priorities—whether it’s saving for a computer or building an emergency fund—and make sure they are achievable. Create a plan of action and measure your progress over time.
- Start a savings account (if you don’t have one already). FNBMD offers automatic transfer services to move a set amount from your checking account to savings monthly – the easiest way to stay on track with savings goals.
- For working-age students, consider part-time or seasonal employment. You will learn more about personal responsibility and have an opportunity to manage income and expenses.
- Track your spending and avoid making impulse purchases. Create a budget and review it periodically to make necessary adjustments.
- Gain perspective about risk and reward. Knowing how stocks, bonds and mutual funds can affect an investment portfolio shows you how financial decisions can grow—or shrink—your savings. Some high school classes and financial literacy-based websites provide simulations of how these investments work in the real world.
- Learn about credit scores—a representation of your financial past, present, and future. FNBMD can offer tips to help you establish and maintain good credit.
Having the knowledge about how to best manage your money is just the start. When young adults practice proper money management techniques early, they’re more inclined to make effective financial decisions throughout life. The sooner children and teens start to grasp these concepts, the more apt they’ll be for a better financial future.