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.”
At HomeTown Bank, we understand the importance of helping our community’s youth 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 2020 Survey of the States, only 21 states in the U.S. require high school students to take a course on personal finance. While this denotes a marked improvement since CEE’s first survey in 1998, there remains a sizeable financial education knowledge gap.
HomeTown Bank 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 milestones like paying for college, purchasing a home, opening a business, or building a nest egg.
Here are some tips for today’s youth and their parents to learn money management skills and prepare for the post-graduate workforce:
- Set Specific Measurable Attainable Realistic Trackable (SMART) goals. 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 saving account (if you don’t have one already). HomeTown Bank has our awesome Star Savers account which rewards you for certain aspects while also having a great interest rate.
- For working-age students, consider a part-time or seasonal job. You will learn more about personal responsibility and have an opportunity to manage 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.
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 your children start to grasp these concepts, the more apt they’ll be for a better financial future.