With consumer debt on the rise and many failing to adequately save for the future, experts say that financial illiteracy is a major problem for Americans — and one that communities and parents have a joint responsibility to address, starting in childhood. And right now, most children are coming up short in this area.
Over 62 percent of the 15- to 18-year-olds tested by the National Financial Educators Council received either a “D” or “F” on the 2017 National Financial Literacy Test. Without intervention, these young people could grow up without the skills needed to manage credit cards, loan debt or savings goals.
If you’re a parent, you’ve likely already instilled in your children the importance of good grades and healthy decisions, but if you aren’t also discussing concepts like overall saving, budgeting and the importance of having an emergency fund, now is the time to start. Children are never too young to learn skills needed for a secure financial future. To get started, consider these tips:
• Teach young children money basics by playing “store” at home. Take turns being the customer and the cashier. Play board games involving money exchanges to practice addition and subtraction.
• Give children an allowance and help them create a budget. Stress the difference between needs vs. wants to help them make smart decisions when it comes time to shop for clothes, school supplies, toys and more.
• Offer children incentives to save, promising to match any money they sock away so they’ll learn how invested money grows.
• Encourage teenagers to get part-time jobs, then help them make smart decisions about how to allocate their income, whether that’s saving for big-ticket items, putting money away for college or donating to charity.
• Review free, online financial education materials together that are geared for school-age children, such as those found at PurchasingPower.com and JuniorAchievement.org.
“Purchasing Power has been helping adults learn to manage their money in smarter, more flexible ways for years,” says Richard Carrano, Purchasing Power CEO. “Expanding these efforts to include resources for young people empowers parents to put their kids on the right path in their formative years.”
• Seek out community initiatives helping to combat financial illiteracy. For example, Purchasing Power, LLC, a workplace voluntary benefit that allows US workers to buy brand-name products and services interest-free through payroll deduction versus traditional high-interest credit options, partners with Junior Achievement USA, an organization dedicated to giving young people the knowledge and skills they need for economic success. In Atlanta, for example, more than 30,000 middle school students visit the Junior Achievement Chick-fil-A Foundation Discovery Center yearly, where they work with business leaders to learn about real-life financial situations. Together with Junior Achievement, Atlanta corporations including Purchasing Power are supporting a generation that knows how to budget, save and invest.
“Financial illiteracy and confusion over money matters is a national problem that won’t be solved overnight,” adds Carrano. “However, families, employers and communities can take proactive steps to raise money-smart kids and foster healthy financial futures.”
Children are never too young to learn how to spend responsibly and save for the future. Get started now in your household.