Financial Literacy is Key to Effective Money Management for Teens
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.”
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. While this denotes a marked improvement since CEE’s first survey in 1998, there remains a sizeable financial education knowledge gap.
Peoples Bank of Alabama believes that financial capability 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 building a nest egg.
Peoples Bank of Alabama offers the following tips for Gen Z and their parents to shore up money management skills and prepare for the post-graduate workforce:
- Set Specific Measurable Attainable Realistic Trackable 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 savings account (if you don’t have one already). Peoples Bank of Alabama offers automatic transfer services to move a set amount from your checking account to savings monthly.
- For working-age students, consider part-time or seasonal employment. 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.
- Learn about credit scores—a representation of your financial past, present, and future. Peoples Bank of Alabama can offer tips to help you establish and maintain good credit.
Peoples Bank of Alabama is passionate about helping children and teens build strong financial futures. Each year, we have teams of volunteers who visit elementary school classrooms to share lessons on healthy saving and spending habits. We also visit high school classrooms and teach students about ways to manage money, credit reporting, loans, and banking basics. We sponsor financial education programs in several area schools, and participate in Read Across America as well as other reading programs. We sponsor reading and math summer camps and have volunteers who teach elementary students how to count coins.
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.
