Happy Financial Literacy Month! April is one of our favorite months here at SAFE Credit Union because we get to share with you ways to help you improve your financial well-being.
The first step on the road to financial wellness is understanding the basics of your personal finances, including budgeting, managing debt, credit scores, and of course, saving.
Don’t feel too bad if you never had formal training in this. Most Americans haven’t. Only about 1 in 6 high school students are required to take at least a semester of personal finance to graduate, according to a study by Next Gen Personal Finance.
That means it’s up to parents to teach their children personal financial basics and for the rest of us to hone our skills so we can take charge of our finances.
We’ve put together a list of three ways to celebrate Financial Literacy Month to help you and your family foster a healthy relationship with your money.
1. Teach your children well
It’s never too early to start teaching your children about money. Here are some age-appropriate ways to do so:
Ages 3-5
While kids at this age may not understand the value of money, they should understand the need to pay for merchandise. Kids learn from shared experiences, so include them in the grocery trip to help them understand this process. To make it more tangible, use cash.
Challenge up: Give them the experience of buying something with cash. Give your children a few dollars to spend and have them hand over the money to buy an item.
Ages 6-10
Time to teach your children about saving money for a goal. Have them choose something they want, like an inexpensive toy. Use a savings jar to provide a visual and increase their excitement level as they see the amount of money they’re saving “grow”. Take it a step further and instead of a savings jar, open a Youth Member Account at SAFE Credit Union where they can see their balance grow with every deposit.
Challenge up: Offer your children a way to earn money so they have some to save. You could pay them for chores, grades, or doing good deeds – whatever works for your family.
Ages 11-13
This is a great time to introduce the concept of a budget. Have your children help you create a budget and list for the grocery store or back-to-school shopping. As you shop, ask them for ways you can keep on budget by comparison shopping, looking at the differences between brand names and generic labels, looking for items on sale, and determining the cost per unit for bulk goods.
Challenge up: This is the age when kids start noticing what their friends have, such as cell phones or the latest shoes. Find ways to teach your children to be content with what they have, perhaps by volunteering or donating items they don’t use anymore.
Ages 14-18
College and career choices are looming, so discuss different jobs they might be interested in, as well responsibilities and income. Explain deductions, such as taxes, Social Security, and insurance premiums. If your children don’t already have bank accounts, consider opening up checking and savings accounts to show them how to handle their finances.
Challenge up: Discuss how the family will pay for their college education: parent contributions, after-school jobs, financial aid, scholarships, and grants. Have your children research different career paths (educational requirements and salary prospects) as well as costs for different universities. Then have them review how much student loan debt could affect their lifestyles after graduation.
2. Hone your own skills
Build a budget. You will get much further with your finances if you make and follow a budget. By making a budget on paper, using an app or spreadsheet, you will know just how much money you have coming in each month and what your regular expenses are. From there, you can figure out how much you can spend on your wants and how much you can save. It will also keep you from accidentally overdrawing on your account or having to depend on credit cards to get to the end of the month.
Learn the concepts of credit. Managing credit wisely can help you save money in the long run. How? Higher credit scores may lead to lower interest rates on loans. Some basics to know are the difference between a credit report and credit score. A credit report is a compilation of credit-related information; a credit score is a three-digit number taken from the report data. It’s important to know both to make sure your credit is on track. Your credit score is used by more than just lenders—utilities, such as gas and electric, as well as home insurers, cellphone companies, and landlords may use credit scores to determine rates and deposits.
Learn about loans and debt. There are different kinds of debt, including credit cards, car loans, mortgages, and student loans. They all operate differently. If you don’t know how different forms of lending work you could end up with unmanageable debt. Loans are not created equal. They have different interest rates, terms, and repayment options. Make sure to consider each one before signing on the dotted line.
Take advantage of online resources. SAFE Credit Union offers Financial Fitness Academy, a free online service that offers engaging modules on topics including building emergency savings, paying for college, retirement, and credit. The U.S. government sponsors https://www.mymoney.gov/Pages/default.aspx, dedicated to teaching the basics about financial education.
3. Register for SAFE webinars
Join SAFE’s financial educators in 30-minute fun and engaging webinars on topics for all stages of your financial journey. Topics include tips for first-time homebuyers, setting up a living trust, managing debt and your budget, as well as being mindful with your money. We offer new courses each month, so find the latest and register for the ones here that will help improve your financial wellness.
Keep on learning
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Take the 52-week savings challenge to start saving today.
Learn more about launching your kids into a lifetime of financial responsibility.
