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The Importance of Financial Literacy and How B-M S FCU Can Help Parents Teach Their Kids

September 3, 2024

In today’s fast-paced and complex world, financial literacy is crucial. Understanding how to manage money, save for the future, and make informed financial decisions are skills that most people don’t realize they don’t have a strong enough understanding of. Most people often find out they are lacking in financial literacy when they think they are ready to make a major purchase and find out they are sorely mistaken. This is where early education could’ve transformed them. Parents play a pivotal role in instilling financial literacy in their children, and with the help of resources from B-M S Federal Credit Union (FCU), this task can become more manageable and effective.

The Importance of Financial Literacy

Financial literacy refers to the ability to understand and effectively use various financial skills, including personal financial management, budgeting, and investing. According to the National Endowment for Financial Education (NEFE), 63% of Americans lack basic financial literacy skills, which can result in poor financial decisions and long-term economic hardship (NEFE, 2023 (https://www.nefe.org/)). For children, developing these skills can:

  1. Promote Responsible Money Management: Teaching children about budgeting and saving from a young age can help them make informed decisions and avoid debt later in life. A survey by the Jump$tart Coalition found that high school students with financial education courses were more likely to have better financial behaviors (Jump$tart Coalition, 2023 (https://www.jumpstart.org/).
  2. Goal Setting: Financial literacy helps children set and achieve financial goals, whether it’s saving for a toy or planning for college. The OECD’s Program for International Student Assessment (PISA) found that students who received financial education performed better in understanding and managing financial matters (OECD, 2022 (https://www.oecd.org/)).
  3. Confidence: A strong understanding of financial principles can instill confidence in making financial decisions and navigating economic challenges. Research by the FINRA Investor Education Foundation revealed that individuals with higher financial literacy levels are more confident in their financial decisions (FINRA, 2021 (https://www.finra.org/)).
  4. Financial Stress: Understanding how to manage money can reduce stress and anxiety related to financial issues, leading to a healthier overall mindset. The American Psychological Association (APA) found that financial stress is one of the top sources of stress in the U.S., impacting both mental and physical health (APA, 2023 (https://www.apa.org/)).

Steps Parents Can Take to Foster Financial Literacy

Parents can take several proactive steps to ensure their children develop strong financial skills. Here’s how B-M S FCU’s products and services can support these efforts:

  1. Open a Youth Savings Account: Consider opening a youth savings account with B-M S FCU. This can be a practical way for children to learn about saving and managing money. With features like no minimum balance requirements and competitive interest rates, a youth savings account can help teach the value of saving and how interest works.
  2. Use Budgeting Tools: Introduce your children to budgeting tools and Mobile Banking provided by B-M S FCU. These tools can help kids learn to track their spending and set savings goals.
  3. Teach Through Real-Life Experiences: Encourage your children to save for something they want or help them create a budget for their allowance. For instance, a savings goal worksheet can help kids plan and visualize their savings journey. Resource: https://www.learningresources.com/blog/envelope-saving-system-printable-pack/
  4. Explore Financial Education Programs: These programs often include interactive workshops, online courses, and financial literacy challenges designed for various age groups. Participating in these programs can provide structured learning and hands-on experience.
  5. Encourage Financial Discussions: Make financial conversations a regular part of family discussions. Use scenarios and examples to talk about budgeting, investing, and financial planning.
  6. Set a Positive Example: Demonstrate responsible financial behavior in your own life. Children learn a great deal by observing their parents. Share your financial goals, budgeting methods, and savings strategies with them, and involve them in family financial planning when appropriate.

Financial literacy is an invaluable skill that can significantly impact anyone’s future success and well-being. By taking proactive steps to educate children and utilizing the resources provided by B-M S Federal Credit Union, parents can equip their kids with the knowledge and skills they need to make informed financial decisions. Stop by B-M S FCU today to let us help you and your family plan for financial success!

Sources:

- National Endowment for Financial Education (NEFE). (2023). [Financial Literacy Statistics](https://www.nefe.org/).

- Jump$tart Coalition. (2023). [Survey on Financial Education](https://www.jumpstart.org/).

- OECD. (2022). [PISA Financial Literacy Assessment](https://www.oecd.org/).

- FINRA Investor Education Foundation. (2021). [Financial Literacy and Confidence](https://www.finra.org/).

- American Psychological Association (APA). (2023). [Stress in America: Financial Stress](https://www.apa.org/).