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Financial Literacy: Adding up the benefits of starting young
It’s never too late to start your financial education, but the earlier, the better. From counting coins in kindergarten to planning for your retirement years, managing your finances is a critical part of your financial security — regardless of how much money you have.
Financial literacy now
A 2015 National Capability Study published by the Financial Industry Regulatory Authority (FINRA), reported that two-thirds of Americans could not pass a financial literacy quiz that included basic questions about financial risk.
It also concluded that when age-appropriate personal finance topics, like budgeting, interest rates, and debt are incorporated into a school’s curriculum, it positively impacts the decisions, saving, and spending habits in adulthood.
Benefits of financial literacy
Basic financial literacy helps people become self-sufficient and achieve financial stability. This includes being able to save money, distinguish the difference between wants and needs, manage a budget, pay their bills, buy a home, pay for college, and plan for retirement. Literacy helps them create a realistic roadmap that will take them through their daily lives making good financial decisions.
Financial literacy also empowers people. With any lack of financial education, anything that resembles credit, interest rates, or investments is intimidating and leaves individuals at a disadvantage. We’re not saying you need to be a financial guru, but knowing how interest rates work, the difference between stocks and bonds, and the factors that impact your credit rating, for example, motivate consumers to ask questions and seek out their best options. It also decreases their stress level. When people are well versed in the state of their finances, they have the information they need to take action, modify their investment portfolio, or continue with their current strategy.
Understanding your finances helps reduce the risk of becoming a victim of fraud. Some tactics are easy to believe, especially when they’re coming from someone who seems to be knowledgeable and well intended. A basic level of financial education will help people recognize the red flags and, at the very least, talk with a trusted advisor before making any commitment.
Why it pays to start early
With any educational plan, you’re continually building on the information you’ve learned in the past. It’s the same with your personal finances. You need to know how money works before you spend it, and that takes time and practiced application. Too many of us have learned the value of a dollar a little too late in life or what it means to be drowning in a sea of debt.
Early education allows individuals to develop a healthy relationship with money. They learn the importance of earning, saving, and managing their debt, which leads to becoming a financially responsible adult. They’ll have the knowledge it takes to wisely decide how they’ll pay for college, a car, or even a mortgage and know the consequences of debt accumulation, budget-busting purchases, and high-interest predatory lenders. You shouldn’t have to experience a financial misstep to benefit from it. Start teaching financial responsibility when kids can still be kids and when they’re grown-ups, they’ll know no other way.
April is Youth Savings Month. Here’s how to celebrate!
April is Youth Savings Month, and what better time to remind you about the importance of teaching your kids to save money. Today, financial literacy is one of America’s biggest issues, so the sooner your children understand the how and why behind saving their hard earned pennies, the brighter their financial future.
Effectively communicating the importance of saving for a rainy day can be quite the challenge for parents, especially because stashing your cash isn’t especially fun. That’s the secret, though. Saving CAN be fun if you make it that way, and once your kids realize it was all a lesson, they’ll already understand its importance. Mission accomplished!
Here are some creative and practical ways to tap into savings fun and prepare your kids for a smart and responsible financial future:
Use games to incorporate financial learning. Play “store” and use Monopoly money to show how goods are exchanged for cash. Head to Publix or Kroger with your elementary school-aged children and have them match items and coupons that save money. Love going to garage sales? Give your child $5 to spend on whatever they wish. In time, you’ll see them contemplate their purchases instead of buying everything they see. Sometimes they might even choose to save their money instead of spending it.
Have a gamer? Visit Game Stop and encourage them to purchase pre-owned games instead of brand new video games. Help them find an item they’re looking for on eBay or Amazon where it might be less expensive. Consider giving your child the difference in cost to put in their piggy bank so they can actually see the savings.
Teach the value of hard work
The idea of working to earn money can also be taught early. Assign age-appropriate chores around the house. Help your children at first and gradually they’ll be able to take over the responsibility by themselves. Create a list of chores that earn a specific dollar amount so when your kids need extra money, they learn how to earn it. See, financial learning can be incorporated into almost any situation.
Schedule a field trip
Piggy banks may be the traditional symbol of saving money, but as kids get older, try using a digital coin counting bank. It automatically keeps track of each coin and displays a tally of their savings. Kids love it because they can actually see their money and watch it grow.
Soon they’ll be ready for their very own savings account. Head to your local credit union with your child and ask for a quick tour. Each time they make a deposit, your child can learn a little bit more about the banking system and ultimately the services available to them in the future.
In time, it’ll also open the doors to introduce the concepts of paying yourself first, discipline and patience in spending, needs versus wants, and how credit works.
Don’t let up in the teen years
In the middle school and high school years, teaching your child about earning and saving money gets a little more complex, but it can still be fun.
Take investing, for instance. Purchase a blue-chip stock with fictitious dollars and have them track the daily market fluctuations. How much money would they have lost or gained in three months, six months, and a year? Do the same with a penny stock and you can introduce the idea of risk and return.
Tap into their entrepreneurial skills
Your teen is likely babysitting, mowing lawns, dog sitting, or some other entrepreneurial activity to earn a few bucks. Encourage them to keep track of their earnings and brainstorm with them about how they can improve and expand their business.
What kind of babysitting services do they offer? Do they bring games to play, color with the kids, play outdoors, work on homework together, and make sure the house is picked up before parents arrive home? The combination of all these value-added services will lead to more customers.
Help them market their services. Whether through social media or simply creating a flyer to put in your neighborhood’s mailboxes, show them how to get the word out.
When they talk about their services, they need to communicate in detail. If they’re a pet sitter, they not only walk pups but also spend 30 minutes playing with them. They make sure there’s enough food and water, and that the animals get their daily exercise. People appreciate and will pay for their extra attention.
You can follow your entrepreneurial lessons with the need to assign a certain percentage of earnings to savings versus spending, and creating a budget. With a checking account and debit card, your high school kids will know how much money is in their account and will quickly learn to live within their means, especially if you stay strong and avoid rescuing them with an extra twenty too often. We know it’s hard, but it’s worth it in the end.
Anytime is a good time
Whether it’s across the kitchen table, on the way to a baseball game, shopping for school supplies, or tucking them in at night, there are an unlimited number of ways to work financial responsibility and savings into the conversation. Let’s get going. It’s never too early or too late to start teaching your kids about how they can create a more financially stable future.26
Spring Cleaning for Your Finances
Spring is the time when many people start thinking about purging clutter — that sounds good to us. We suggest expanding that purge to reducing your paperwork, trimming your expenses, and boosting your savings. Sound overwhelming? Don’t worry, we’re here to help.
If it wasn’t one of your New Year’s resolutions, now is a great time to review your budget and see where you can tidy up your spending. Even if managing your budget was one of your resolutions, take the time to see how you’re doing so far. Are there other areas where you can cut spending?
- Cutting the Cord – The movement to replace cable or satellite service and opting for streaming services such as Netflix and Hulu is gaining momentum.
- Gym Membership – If you have a gym membership, are you getting your money’s worth? If not, cancel it. There are other ways to burn those calories that don’t require a membership.
- Cell Phone – Consider changing your plan or even going pre-paid to free up some cash.
- Dining Out – Cook more meals at home. Pack lunches for work or school.
Automate Your Savings
Saving is easy to forget, and money has a way of vanishing when it isn’t designated for a specific function. You have to be deliberate about saving to achieve your goals. By automating the process, you can put a plan in motion and let it take care of itself.
- Set Up Automatic Transfers – If your paycheck is direct deposit, have a set amount from each check go directly to savings. You’ll be less tempted to spend it if it never hits your checking account.
- Round-up Savings Apps – Some apps will round up the change from each debit card transaction and deposit it into a savings or investment account. For example, swipe your card for $4.65 and $0.35 automatically gets transferred into a savings or investment account, depending on the app.
Set Up Automatic Payments
Setting up automatic payments either through online bill pay or your service provider’s website (i.e., cell phone, credit cards, utilities, etc.) makes your finances more efficient and reduces the stress of remembering due dates or paying a late fee because you missed a payment. Keep an eye on your account to ensure you have sufficient funds to cover the automatic payments.
Organize or Shred Old Documents
Reducing the clutter of old documents and paperwork can be refreshing. The tips below can help you do it the right way:
- Shred, Don’t Toss – Throwing old documents in the trash increases your risk of identity theft. Shred them in a shredder. If you don’t own a shredder, Georgia’s Own hosts shred day events for members to securely get rid of paperwork.
- Tax Documents – Don’t get too carried away with purging your documents. Remember, the IRS has up to six years to audit you. Hang on to tax returns and supporting documents for at least that long.
- Scan or Snap – If you’re unsure whether you’ll need a document, you can scan a copy to your computer or snap a photo of it with your phone.
Cut Down on Junk Mail
One of the best ways to reduce paperwork is to keep it from ever showing up. You can opt out of pre-screened offers for credit cards and insurance at optoutprescreen.com. Less junk mail means less paperwork to shred.
Graduation gifts that won’t empty your savings account
With your mailbox overflowing with announcements and party invitations, there’s no denying that graduation season has arrived. Whether it’s high school or college, you’ll want to choose a gift that’s both thoughtful and appropriate for your graduate, but also doesn’t break the bank. Here are a few ideas to offer your congratulations:
A share of stock
A share of stock is a gift that can appreciate over time. To make it a little more personal, you may want to put some extra thought into the company you choose. Do you have some great memories of visiting Disney World together? Buy a share of Walt Disney Company. Mac lover? How about a share of Apple, Inc.? Car enthusiast? A combination of the Big Three, General Motors, Ford, and Chrysler would be a fun choice.
A financial planning consult
Planning, budgeting, and having to stretch your last $20 over the next week is always a challenge. Whether they’re college-bound or heading off into the working world, graduates likely have little experience effectively managing their finances. This is the time when they’re most susceptible to making some huge financial mistakes. Why not put an expert in their corner—other than Mom and Dad—who can offer some professional guidance and warn them of the consequences of poor financial management? It may not be the most exciting gift, but it will be one of the most valuable.
An annual subscription
Is your graduating senior an avid reader? An annual subscription to a specific area of study, personal finance or money magazine could be an excellent idea, especially if it’s digital! How about the WSJ or your hometown newspaper? Not only will they think of you each month when it arrives, they might learn something, find another interest, or just be able to ward off a small bout of homesickness.
A gift card
Gift cards are a great way to go if you don’t want to commit to a specific item. Does your graduate need something practical? Choose a Walmart or Target gift card. Are they headed to work? Maybe they need some new interview attire. Want to make sure they eat more than just pizza and french fries seven days a week? Their favorite restaurant gift card would be perfect. The choices are endless!
Money for groceries, books, gas, school supplies, clothes…cash will never go unused and is always appreciated regardless of the amount. It may not seem as personal, but let’s face it, these graduates are entering a new chapter of their lives, and they’re not sure what to expect or how much it will cost. On the bright side, not having to use a credit card will allow them to manage their debt more effectively and will reduce their chance of accumulating astronomical interest charges!
Whether you decide to give a practical gift, something smart, fun or completely off the wall, we’re sure your graduate will absolutely love it. They’ve worked hard to achieve their success and will appreciate just being celebrated. On to a new adventure, they’re going to need all they help and guidance they can get, and your encouragement and support will mean the world to them!
2017 What’s Ne[x]t Scholarship
What will you do next?
The 2017 What’s Ne[x]t Scholarship is back and we’re excited to once again be giving away $15,000 in scholarships to THREE deserving students. Want to enter? Create a short video (5 minutes or less) telling us where life’s taking you, what your passion is, and what you want to accomplish, and you could win.
Applicants must be a Georgia’s Own member, age 25 or younger, and attending an accredited institution for the 2017-2018 school year. To find complete guidelines or to apply, please visit georgiasown.org/scholarship.
Start filming – applications are due by April 30, 2017!
When should I open a checking account for my child?
Many parents establish a savings account for their child early in life in order to save birthday money or a part-time job paycheck. But what about a checking account? When is the best time to add one to my child’s list of responsibilities? Most would say the best time to add a checking account is early in the teen years, but the real answer, however, is when your child has demonstrated an acceptable level of maturity concerning the money they have been entrusted with thus far.
What do I need?
A teen checking account can help guide your child in the right direction before poor spending habits become the norm. Since you, as a parent, will likely have to co-sign for your child’s checking account, this can be an account that the two of you can handle together. You’ll both have access to the account information, including the ability to monitor transactions. This will allow you to review check payments, withdrawals and other activity before it’s gone too far off track.
To open an account you will need:
- Your child’s Social Security number and date of birth.
- A picture identification, i.e. your driver’s license.
- Personal details such as your address, email address, and date of birth.
- Your initial deposit, including cash or checks.
What about a debit card?
A debit card is an additional responsibility that comes with a checking account. Any time your child uses their debit card, a given amount will be deducted from the funds in their checking account. It’s critical to explain the risk of overdraft and the consequences that accompany it. They should also be aware of the risks they open themselves to should they lose their card or have it stolen. They should immediately report the loss of their card to the issuing bank and never write down on paper or verbally share their PIN with anyone.
As a parent, you want your child to be able to handle their finances in the most effective way possible. A saving account is an excellent head start, and a checking account is a wise follow-up. It’s never too early to get started on their financial education, and these products are the stepping stones that will serve as the foundation for their success.