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The Importance of Filling Our Community Pipelines with a Financially Literate Workforce 

It’s back-to-school season. In the days ahead, tens of thousands of young people across our community will be headed back to classrooms, study halls, activity rooms, gyms, and sports fields for another school year. But one day, these same students will be young adults, walking into offices, stores, hospitals, and manufacturing facilities, etc., as the next generation of workers, innovators, and leaders.

While many will be prepared in a scholastic sense, will they be fully versed in life’s essential lessons that schools don’t always teach? What will complete the circle of a well-rounded education? What skill set is essential to ensuring our communities remain vibrant and thriving, and that our employers have a sufficient pipeline of qualified workforce talent to fill quality jobs? Financial literacy. 

A recent article in TheStreet noted that the “main problem and contributor to financial illiteracy among teens is that not enough financial literacy classes address teens, and those that are in place are less than fully effective.” 

The question then becomes…where can we direct students to find this critical education in fiscal responsibility and financial health?

READ — Do you need a financial advisor?

Colorado is fortunate to have community-focused organizations like Junior Achievement-Rocky Mountain, Inc. (JA) and the Independent Bankers of Colorado (IBC). Both provide and sponsor programs that support our communities’ next generation of a financially literate workforce.

JA’s highly effective financial literacy program, JA Finance Park,challenges teenagers to juggle adult financial responsibilities through a reality-based budgeting simulation. During this immersive program, youth learn how hard it is for individuals and families to live within their means when considering the increasing cost of housing, transportation, food, health insurance, and technology, etc. 

Additionally, the Daniels Fund JA Dream Accelerator, which will give high school students the opportunity to participate in an interactive and personalized career exploration journey – motivating them to develop a plan to pursue a meaningful career tailored to their unique interests and aptitudes, will be coming soon to JA.

The positive long-term impact of JA’s programs was reaffirmed in a recent 2022 survey of 1,003 JA alumni. Results showed that 68% of JA alumni report they are financially independent from their parents compared to 34% of their peers, and 68% say they are saving for retirement compared to 40% of their peers.

This is good news for organizations like IBC, which is the exclusive voice for 55 community banks across the state – in many of the same communities where JA is actively engaging – to enhance their profitability, advocate for common legislative and regulatory goals, and provide a forum to build relationships and share ideas. Community banks provide an economic lifeline to Colorado communities and are assets that invest in the future of their residents.

IBC members recognize that the long-term viability and success of their communities, many of which are rural and agricultural, are reliant on the economic education of their residents. That’s why IBC recently supported legislation to bring financial literacy programs into high schools, backed the creation of the Office of Financial Empowerment to improve access to financing education and resources for lower-income households and actively promotes the FDIC’s #GetBanked program, an informational resource to help individuals and families open and maintain a bank account as a first step towards financial well-being. IBC also annually grants scholarships to local students to further their education, and many IBC members offer internship programs.   

The significant value provided to our communities by these financial literacy programs cannot be overstated. Many of these community banks will likely be the future employers of JA’s financially literate students. And these students will likely be the future business leaders of those communities, continuing to fill their pipelines with a financially literate workforce.  

  

Robinwise
Robin Wise
Mike Van Norstrand
Mike Van Norstrand

Robin Wise is the President & CEO of Junior Achievement-Rocky Mountain and Mike Van Norstrand is the Executive Director of the Independent Bankers of Colorado.

What financial literacy means at every age

While you should always try to make informed financial decisions, it’s especially important to understand the impact of financial education during each life stage. Here are three ways you can sharpen your financial knowledge and understand what financial literacy means during every stage of life.

Financial literacy for children and teens

Now may be the perfect time to address the importance of financial education with children and teens. Many schools incorporate basic financial lessons, but at home you can also introduce financial literacy topics and money management, including the following.

Consider an allowance

It’s important to teach kids how to save. Consider giving children an allowance as a tool to build their financial education. Have them save a portion of their allowance – whether it’s 10% or 20% — and keep them informed of their progress over time. Teaching money basics can be simpler when children have real money to learn and interact with.

Open a youth savings account and establish long-term goals

Children like to be given opportunities to show their responsibility. One way to do just that is setting up their own youth savings account. Not only does this give them a financial foundation, but it also allows them to make measurable savings goals. As children approach their teens, discuss a car-buying goal and keep them involved in the savings process.

Graduate this goal into giving teens hands-on experience with spending. Once they have a car, they will need to make purchases for gas, their weekly outings or their car insurance. If they have a part-time job, make sure they save some of their earnings and appropriately budget the remainder for their expenses.

Have honest financial conversations

Just as it’s important to show and teach how to save, have an open, honest dialogue with your children about money mistakes you have made. Bring your kids into the conversation and discuss how and why the mistake was made, and what you have done or plan to do to resolve the problem.

Learning about finances in your 20s and 30s

As you enter adulthood, you should understand the basics of budgeting and the responsibilities that come with financial independence. Here are ways you can improve your financial literacy during this life stage.

Secure your financial foundation

As you take on expenses such as rent/mortgage payments, phone bills and other monthly payments, map out your monthly budget—and stick to it. Financial literacy at this age sometimes means limiting the nice-to-have expenses, such as eating out or traveling. One of the most important elements of your financial foundation is a savings plan. As a rule of thumb, your savings should include an emergency fund that can cover at least six months of your expenses.

Research large purchases

This life stage is often the first in which you will be faced with making big-ticket purchases and saving for future purchases. Research is an important stage in the purchasing process. Make sure you are getting the best value by shopping and comparing before making a major purchase or taking out a loan for an expensive item.

This also means staying on top of credit card and student loan payments. Try to steer clear of additional debt or missing any payments, which can negatively impact your credit score.

Take advantage of offerings from your employer

As you enter the workforce, learn about the programs your employer offers. Many businesses may offer 401(k) plans, tuition reimbursement and wellness incentives that can help cut costs. Even if retirement is 40 years away, saving now can make a difference in the long-term growth of your portfolio.

Strategies for your 40s and 50s

As you enter this age range, financial education and focusing on the long term is more important than ever. Three ways to improve your financial literacy at this life stage include the following.

Consider increasing retirement contributions

Your 40s and 50s may be your peak earning years. There are many ways you can maximize your earnings during this period, such as using your professional know-how to start a side business, seek a promotion, or search for career advancements. These can help increase your income with the goal of saving more for your retirement.

Eliminate your debt

While you may have accumulated debt from student loans, car purchases or a mortgage, now is the time to trim debt. In today’s rate environment, it may make sense for you to refinance your home loan, which could reduce your monthly mortgage payment, and cut your monthly spending. In general, the financing decisions you make at this stage can impact your long-term plan and goals.

Adjust your budget as your life changes

As you get older, you may have children move out and gain financial independence. You might also downsize your home. Or, in some cases, you may assume additional financial responsibilities if your parents require support in their golden years.

Whether you experience an increase or decrease in your spending, adjust your budget and savings. Take advantage of a financial partner to help navigate a more robust savings strategy and walk through the steps you need to take as you near retirement.

Staying savvy in your golden years

As you enter this life stage, continue building your financial literacy by taking the below steps.

Establishing a post-retirement budget

Once you retire, your budget will look completely different. While this can be unsettling if you have been following the same general budget for decades, it’s an important and necessary transition. Work closely with a financial partner to determine your strategy as you start tapping into your retirement funds and create an entirely new budget for your changing finances. At this stage, you need to know how much you can continue to save.

Determine when to start using Social Security

The minimum qualifying age for taking Social Security is 62, but you may not want to opt in immediately. If you already have a strong retirement plan, you should consider waiting until you reach the full retirement age, which can allow you to receive larger payments.

Keep investing

Reaching retirement does not mean you should abandon your investment strategy. Maintain an investment strategy that allows you to address your future financial needs.

While you should work with a financial partner to determine the mix of savings and investments you are most comfortable with, both are important to make sure you continue earning money after retirement.