By: Cheryl McCollum, Wisconsin Bankers Association
Sixty-one percent of teens know how to write a check, 54 percent can use a debit card, but just 41 percent know how to balance a checkbook. And while 66 percent say they can shop for the best deal, just 48 percent understand how to budget their money.
Research statistics such as these by the Charles Schwab Foundation show there’s a long way to go to help consumers understand how to manage their money better.
It’s been said that the earlier in life you learn a foreign language, the more fluent you become. The same holds true for money. Early lessons in learning how to spend, save and invest can prepare a young person for a lifetime of sound money management.
Many parents don’t feel confident in providing this basic information. In one study, just 26 percent of parents said they felt “well prepared” to teach their kids about basic personal finances and less than 44 percent of parents with teenagers who have a credit card, talked to them about how to responsibly use it.
So the message doesn’t seem to be getting through. Too many young Americans today aren’t getting enough good, practical information on how to handle their money. Parents are either not up to the task, or aren’t interested. And most schools aren’t teaching money and savings skills. Few states, including Wisconsin, require high school graduates to complete a course that includes personal finance. Many teachers are not trained to teach personal finance; some have never even taken an economics course.
Yet the nation’s teens spent roughly $159 billion in 2005, according to Teenage Research Unlimited. And the direct buying power of kids aged 4 to 12 is predicted to exceed $51.8 billion in 2006.
It’s no longer just a nice idea to teach kids how to handle money. The failure to teach them could lead to a financial literacy crisis in America. Some believe the crisis is already here.
On April 25, hundreds of Wisconsin bankers return to the classroom and participate in the 10th annual National Teach Children to Save Day. Earlier this month Governor Jim Doyle declared April 25 Wisconsin Teach Children to Save Day. While year round, bankers use their expertise to help students manage their money better, Wisconsin Teach Children to Save Day is a focused event to give young people the resources to help them develop those critically important money management skills.
We can overcome the lack of financial literacy if we encourage more parents, schools and community leaders to focus on the problem. Learning to handle money, spend carefully and invest wisely is an important step to prepare our young people for adulthood. The Wisconsin Bankers Association and its more than 300 Wisconsin bank members wholeheartedly support a team effort in financial education for young people. We hope you do, too.
–Cheryl McCollum is the director of communications for the Wisconsin Bankers Association and oversees the WBA Personal Economics Program.