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.”

At The Bank of Elk River we understand the importance of helping our community’s youth build a solid 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 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. 
 
The Bank of Elk River 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.

In 2023, the bank conducted five financial literacy presentations at local schools. In addition, 1,357 new students signed up for Banzai, a free interactive financial education platform, through The Bank of Elk River. The bank’s partnership with Banzai also saw 21 active teachers, 12 active schools, and 1,080 workbook orders in 2023.  

The Bank of Elk River 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). The Bank of Elk River 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. Some high school classes and financial literacy-based websites, provide simulations of how these investments work in the real world.
• Learn about credit scores—a representation of your financial past, present, and future. The Bank of Elk River can offer tips to help you establish and maintain good credit. 

Having the knowledge about how to manage your money best 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.