Both locally and nationwide, financial literacy is a huge issue. Kids who grow up without understanding money and how to use it become financially illiterate adults and business people.
Let’s define the term.
Basic financial literacy includes the personal financial management skills needed to make informed decisions on accumulating wealth, managing money and using credit wisely.
Outcomes are a better standard of living and improved ability to succeed in business endeavors.
Over the years the responsibility for educating youths in financial literacy has slipped between the cracks, and for the most part it’s not taught in schools or at home.
Unfortunately, generations of parents who didn’t learn how to practice sound financial judgment can’t impart these skills to their kids.
But the problem is deeper than that.
Given the lack of financial literacy, it’s no wonder many in the boomer generation are facing unfunded or underfunded retirements.
That means delayed retirement and staying in the workforce longer, which in turn has a ripple effect on employment opportunities for upcoming generations.
It’s time for all of us to get involved. Here are some starter steps, whether you’re a business or family:
Educate business associates about benefits: There are many opportunities to create teachable moments for employees, including plain talk about employee health benefits and 401k programs.
These programs are often complicated, so business owners and managers simply need to ask providers for tools to make them understandable to employees — and then make time for employees to take advantage of the tools.
Provide additional financial education: We can’t assume employees know how to manage their money, much less teach their kids how.
If they can’t manage their own money, they will probably be less effective in managing your corporate assets — so this is clearly a win-win for them and you.
Try approaches such as “Lunch & Learn” sessions on topics such as budgeting, using credit wisely, saving and investing — often available through your financial institution or financial advisor.
As parents and role models, it’s our obligation to help upcoming generations understand how financial literacy can help create a better future. Start early by showing them how money is earned, not given; begin with an allowance they get from doing housework.
Demonstrate by example that a portion of everything earned should go to savings, and open a savings account for them.
Remember charitable giving, and help them put aside a portion of their earnings to donate. Involve them in choosing a charity, which may also be a great opportunity for the family to volunteer time together.
This is just the beginning. There are tremendous resources out there to help you get started. Local not-for-profits such as Junior Achievement and Boys & Girls Clubs have already made major commitments to financial literacy.
Contact them or me to see how we can work together to create a more financially literate — and more successful — community.
Joe Brancucci is CEO and president of GTE Financial (www.gtefinancial.org), a not-for-profit financial cooperative that is locally owned and operates across West-Central Florida. He can be reached at [email protected]g.