Wednesday, April 14, 2010

Educating Youth on Money Matters

by Milt Sharp, Senior Homeownership Specialist, NeighborWorks America

When I was younger, my grandfather would often tell me, “Son, an ounce of prevention is worth a pound of cure.” Educating youth as early as possible about the importance of finances will better prepare them to navigate complex financial decisions later in life. As today’s market has shown, making poor financial decisions can have a tremendous impact on individuals and the communities in which they reside.

To this end financial literacy programs across the country are reaching out to youth in a variety of creative ways to promote economic achievement. These programs use approaches that understand and appreciate youth involvement, youth popular culture, and positive peer influence. Role playing of real life situations — such as someone making the choice to use a check cashing facility as opposed to a bank; or a scenario where an individual needs to choose between saving or purchasing from a rent-to-own outlet — brings the issue home in a way that makes a lasting impression. Inner city youth are faced daily with predatory financial services and need knowledge beforehand to avoid being caught in “money traps.”

Good programs should, of course, cover the standard core content of savings, investing, credit, taxes, insurance and personal money management. But they should also include the influence of advertising. With today’s consumer culture of immediate gratification, it is important to emphasize advertising’s influence on youths’ buying habits and even their self image. Financial literacy can no longer focus just on increasing financial knowledge and skills but should also look at adjusting financial attitudes and behaviors.

Community Development Corporations and banks are natural financial literacy partners to schools in teaching youth on money matters. Many schools offer after-school programs and therefore provide excellent opportunities for financial literacy to be taught at the school by financial service providers and nonprofit organizations. Many banks offer youth savings accounts and savings clubs and also participate in supporting Youth Individual Development Accounts, programs providing a dollar match for a youth’s savings earmarked for post secondary education, small business development, and in some cases purchasing an automobile. Teaching youth about money management while offering savings incentives, can be a powerful combination for getting youth on a sustainable financial path.