Financial literacy key to unlocking life's dreams
Knowing how to properly manage money is the key to unlocking life's dreams.
Sticking to a budget and paying bills on time builds good credit, which can help secure a loan to buy a new home for a growing family. Understanding how student loans work can help pay for college, with proper education and training serving as the framework for a long and successful career. Routinely contributing to retirement savings plans ensures the resources needed to enjoy your golden years, whether that entails traveling the world or sticking closer to home.
But smart money skills aren't something we are born with. They take practice, dedication and discipline. And unfortunately, these are skills many people are never taught and therefore never learn. At the Illinois Bankers Association, we are dedicated to providing these educational opportunities to everyone, which is why we pause each April to recognize and celebrate Financial Literacy Month.
Established by Congress in 2004, Financial Literacy Month brings together financial institutions, government agencies, nonprofit organizations and other entities with the goal of expanding the personal finance skills of all Americans through accessible education. Financial literacy is crucial to building a foundation of skills to manage money effectively by saving, protecting, and investing wisely.
Sadly, financial literacy is steadily declining in the United States according to a recent study by the Financial Industry Regulatory Authority. In 2018, over 53% of adults reported that thinking about their financial situation makes them anxious, while 44% said discussing their finances is stressful. These issues have been severely exasperated by the financial devastation of the COVID-19 pandemic.
The best way to ease these stresses is to take advantage of financial literacy programs that will help build the confidence needed to improve personal and household financial stability one step at a time. It's never too late to learn.
Reach out to your bank and ask what sort of financial literacy programming they offer. Most provide no cost education resources for people of all ages. The federal government also provides numerous free online resources at www.MyMoney.gov.
Most importantly, don't be afraid to talk to your children about good financial habits. Far too many children aren't taught about even the basics of spending, saving and budgeting. Illinois banks are doing their part to integrate financial literacy into education programs, sponsoring several programs that pair banks with schools to remove the mystery surrounding financial management.
This includes the Stock Market Game, which introduces young people to saving and investing through a simulation of the stock and bond markets. Students can trade and manage their own virtual $100,000 investment portfolio, with the top teams receiving recognition for their accomplishments with medals and certificates. The IBA also administers Banzai, a web-based financial literacy program for all ages and groups, including K-12 schools, community programs, employee onboarding and families that teaches skills like budgeting, saving, understanding debt, using the internet safely, and more with experience-based online games.
Additional programs include the FDIC's Money Smart initiative for people of all ages and the Teach Children to Save program, a free national program sponsored by the American Bankers Association Foundation that organizes banker volunteers throughout the year to help young people develop a savings habit early in life.
Now more than ever, it's vital to raise awareness of these opportunities, especially in underserved communities where expanded access to these resources is most needed. It's important we focus on increasing financial literacy not just this month, but every day. Dreams are relying on it.
• Randy Hultgren is president and CEO of the Illinois Bankers Association.