April is Financial Literacy Month, and we want to encourage our customers and community members to take control of their financial future by learning fiscally responsible habits and putting these lessons into practice. Regardless of life stage, age, or income level, having strong financial principles and sound money management practices can help you avoid financial missteps and position you for greater success. We also think it is crucial for young adults to develop these skills early on in life, so they can set out on the right path with their banking and credit habits.
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.”
At Northwest Bank & Trust Company, we understand the importance of helping our community’s youth build a strong financial foundation so that they better understand basic concepts like budgeting, simple interest, and establishing and maintaining good credit.
According to the Council for Economic Education’s 2020 Survey of the States only 21 states in the U.S. require high school students to take a course in personal finance. While this denotes a marked improvement since CEE’s first survey in 1998, there remains a sizeable financial education knowledge gap.
Northwest Bank 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.
We offer the following tips for Gen Z and their parents to shore up money management skills and prepare for the post-graduate workforce:
Set SMART (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).
- Northwest Bank 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
- Credit scores are a representation of your financial past, present, and future. We can offer tips to help you establish and maintain good credit.
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.