How we earn money is an important part of our lives and many of our financial habits are learned in childhood. How many of you got an allowance as a kid or worked an after-school job to pay for gas or save for college? We may learn at a young age how to earn money, but we don’t always learn the skills to manage it effectively.
The good news is that it is possible to help teach children (and adults) financial management skills. The month of April is designated as National Financial Literacy Month and is a great time to brush up on your own financial management skills.
Teaching our children how to establish and maintain healthy financial habits is important, but not all parents have the knowledge to be able to effectively teach everything kids need to know as they grow up. Fortunately, some schools are stepping up to help.
According to a survey of 172 public and private schools in Nebraska, 122 schools currently offer a personal finance class. In order to graduate, 47 schools require personal finance and 52 schools require economics while some may require both. Nationally,22 states require an economics class and 13 states require a personal finance course. Nebraska does not require either class for graduation.
Teaching smart money management and good financial habits starts well before a senior year econ class. Opening a college savings account is one way to start teaching children the importance of saving. As a state, we can help encourage families to save for college with small changes to educational savings accounts as introduced in legislation this year by Senator Hadley or through encouraging parents to save for college every year at tax time.
Another way the state can help build financial literacy is in Individual Development Accounts. These accounts match savings for low-income families and help them purchase assets – like a home or education.
Policies that improve college savings programs or help low-income families build assets are just small steps toward encouraging savings and improving financial literacy for children and families.