It’s a financial literacy test, and a full 66% of Americans cannot answer more than 3 out of 5 questions correctly.
April is Financial Literacy Month, a time when we recognize the importance of financial literacy and how we are doing at this as Americans. If you recall, we discussed this just about a year ago in our blog “Financial Literacy becomes Required Subject.”
So, what has changed since then? On March 11, 2020, according to the World Health Organization, the Coronavirus Disease 2019 (COVID-19) officially reached pandemic status. Families across the globe are now faced with a crisis unlike any in their lifetimes. A crisis not only of health, but also of financial wellbeing. As you can imagine, there is no better time than the coming months to talk about financial literacy and the importance of sound financial management.
This is a tremendous opportunity for financial institutions. In order to properly prepare our children for the huge leap into adulthood it is imperative they are equipped with tools to properly manage their money, obtain and maintain credit, plan for their future savings, budget their expenses, and much more. Who are the parents of those children so in need of an education in how to manage money? Your customers.
According to the Council for Economic Education, fewer than a third of the high schools in the U.S. require high school students to take a personal finance class in order to graduate. And one in five 15-year-olds in the U.S. lacks basic financial literacy, according to the Program for International Student Assessment, as outlined in a US News and World Report article, 8 Scary Financial Statistics and How to Avoid Becoming One. Concepts such as student loans, interest rates, qualifying for a mortgage, credit, and balancing a checkbook are proving to be foreign concepts to many Americans. Recent studies show that “Americans demonstrate relatively low levels of financial literacy and have difficulty applying financial decision-making skills to real life situations. Study participants were asked five questions covering aspects of economics and finance encountered in everyday life. In the U.S., 66% are unable to answer more than three of the five questions correctly” – a worrisome figure!
What happens when young people do not achieve a good foundational understanding of money management? They become the elderly Americans who are not prepared for retirement, of which there is an absolutely staggering number. According to a pre-Covid 19 survey done by the Federal Reserve Board, around 40% of U.S. adults do not have enough money in their savings account to cover a $400 emergency or household expense. That financial situation has, unfortunately, worsened for many Americans.
Given the uncertain economic times we now face, and we could face tough times for quite some time, it’s critical that young people know how to earn, save, invest, and spend their money. And as a financial institution, the lessons you help their parents teach will benefit them (your customers), their children (your future customers) and, therefore, your bottom line. By providing your customers with just a few of the basic tools and guidelines they need to educate their children in financial literacy, you can enhance your brand image while helping your future customers better understand, and value, the products and services you offer.
For more information on how BankMarketingCenter.com can help your bank with messaging that stresses the importance of financial literacy in a Covid-19 world, contact Neal Reynolds at 678-528-6688 or nreynolds@bankmarketingcenter.com