Businesses, especially those that rely on younger workers who are just entering the work force, have a stake in making sure their employees have a g o o d wo r k i n g knowledge of personal finance. When the struggle to understand and manage personal finances hin
ders employee productivity, businesses pay a price.
The solution starts with education. As the Chinese proverb goes: “Give a man a fish and you feed him for a day. Teach him to fish and you feed him for a lifetime.” Where financial literacy is concerned, too many young people out there have not yet learned to fish. They are growing up quickly and may find themselves on your payroll one day.
Here are just a few statistics that demonstrate the problem:
According to the JumpStart Coalition, only 52 percent of high school seniors got a passing grade on a national survey to test their financial knowledge. Things don’t seem to be getting better for many students after graduation-as most of us know, we live in a state that is a bankruptcy leader.
The coalition’s statistics also show that
75 percent of credit card holders nationwide maxed out a card last year.
Things are looking up, though, and seeds of financial knowledge are being planted. More emphasis on financial education is making its way into classrooms around the state. I’m especially proud that credit unions are taking leadership roles in many of these schools by either teaching financial literacy classes or, in some cases, opening a credit union in the school building to teach money management skills with a hands-on approach. Nationwide, thousands of credit unions celebrated National Youth Week April 17-23, which included emphasizing financial literacy.
Many members of Congress understand the importance of financial literacy, too. Recently enacted bankruptcy reform legislation will require financial counseling for those who file for bankruptcy. But a better solution is to find ways to help those who are at risk for bankruptcy and for a myriad of other financial problems before it is too late.
As employers, you can consider hosting basic financial sessions at your place of business. You may be surprised at how many of your employees would spend a lunch hour learning about the importance of maintaining a good credit score, how to make savings grow, or what to consider when making their 401(k) investment choices. It is a pretty safe bet they haven’t been exposed to these topics in school.
Parents have countless opportunities to teach their children the basics of managing their personal finances before they have to learn the hard way. Let your kids’ schools know that financial literacy is important to you and work to get it covered in the classroom. Resources abound: The National Endowment for Financial Education provides free materials that were distributed to 174 schools in Indiana last year.
Financial success is a goal for all of us, but it is harder to reach for those who never learn to plan for their personal financial security. What we face today, confirmed by statistics from across the country, is that consumers are spending too much and saving too little. With many people, the problem is compounded by the fees they pay and high loan rates they must accept due to poor financial management decisions. And, as we know, youth are particularly vulnerable.
Intelligent financial management is essential to the success of your business. Confidence in managing personal finances is essential to many employees’ ability to be at their best when at work. Businesses, parents and schools all have a vested interest in making financial literacy a priority.
McKenzie is president of the Indiana Credit Union League, a statewide trade association representing more than 200 member-owned, not-for-profit financial cooperatives.