Have you ever had a conversation with a child that begins with the assumption that they understand something simple, but ends with that child learning a simple truth? Just recently I had a conversation with my eleven year old son that began with him talking about his aspiration go to college on an athletic scholarship. (Because you know all cool adults in his 11 year old world are athletes.) In my most motherly tone, I suggested that athletic scholarships can be rather difficult to land, so maybe he should focus on an academic scholarship. He stopped for a second and looked at me with a puzzled face and doubt in his voice and said, “Can you get a scholarship for good grades?” When I answered “YES silly” to insinuate he should know that already, he says “No one ever told me that”! My initial reaction was to shake my head in amazement and I wondered how he missed that simple fact. But I quickly realized he was right, no one had ever educated him on academic scholarships. It was so simple and so basic that I couldn’t believe he didn’t understand.
I think this is also true of young adults and basic banking knowledge. A large number of young adults entering the workforce today have not been taught about banking. They haven’t been educated about the difference in a checking account and a reloadable cash card. They haven’t learned how to balance a checking account outside of viewing their balance online. Young adults hear bits and pieces of financial advice, but may never really get the basics presented to them. As a career banker, I think that we sometimes assume that our customers have the same financial education that we have acquired through our work life. As adults we assume that children just innately understand how money works. But the reality is that financial education isn’t a part of the high school curriculum. It really isn’t covered in college unless you are majoring in finance or accounting. So it’s up to us, as parents or grandparents and communities to educate today’s youth. Learning to balance a checking account, determine what type of account is most appropriate for their needs, build a strong credit score or avoid ruining a credit score are all important things to understand as young adults. And if no one ever tells them these simple truths, they can make a mess of their financial future that can take years to rebuild, and all because no one ever told them how to do it correctly.
If you are the parent a teen or college student, take some time to educate them about the basics of banking. Your credit union or bank is sure to have educational resources available to you at no cost. There are also numerous websites and you tube channels that exist for the purpose of financial education. Here is a basic checklist of banking and financial lessons to get you started with your teen or young adult.
- How to keep track of spending and account balances. Whether they use an old fashioned checkbook register or a new smart phone app, knowing your balance is always important.
- Always read the fine print when enrolling in a new product or service (student loans, credit cards, checking accounts). Convenience isn’t always the best option, and it is often the most expensive. Don’t be afraid to ask if you don’t understand the terms or conditions.
- Use credit cards cautiously and make sure you have an income stream to cover payments. College students and young adults receive an overwhelming number credit card offers. Beware of overextending yourself.
- Develop a system to ensure you don’t miss payments. Late and missed payments are hard to overcome from a credit standpoint.
- To build credit history, use a credit card and pay it off in full each month. Higher balances do not mean better credit.
For more financial education resources visit our website, https://www.cpmfed.com/?page=educational_resources.