The financial landscape of America is changing rapidly. Many factors contribute to this change, but the one we’re primarily interested in today is the need for all communities to be financially literate. It’s not just about personal finance anymore; it’s also about community and social finances.
Some communities are teaching residents more than when to call a foreclosure lawyer or expert when they encounter financial problems. Leaders and community workers are making it a point to teach financial literacy and wealth management to residents, especially the younger generation.
Financial literacy isn’t just a measure of how much money you have: it’s an indicator of your ability to make informed decisions concerning your money and your life-determining choices related thereto.
The importance of financial literacy for individuals, families, neighborhoods, townships, cities, and states cannot be overstated. So what can you do?
Here are six ways that will encourage financial literacy in communities across America:
1. Have a financial literacy day at your local library.
In the past, financial literacy was considered a specialized skill. But now, it has been shown that everyone can access these skills and knowledge by following a few simple steps.
Offering free classes on personal finance basics for adults and children alike at libraries, schools, faith-based organizations, etc., is one good way to encourage financial literacy in your community, especially among young adults.
2. Educate children about the importance of saving money while young.
One of the most important things you can do is teach kids about money from an early age so that they grow up understanding finances and how they work.
Teach them how to budget and what money is used for by giving them an allowance. Encourage children that have their bank accounts to save a portion of their income while teaching them that money can be put in the bank or used to purchase items they want/need.
Use books about saving money as a starting point for a discussion between the parent and child. Children’s literature is an excellent way to get children thinking about saving money early on in life before they receive their allowance.
3. Create a financial literacy program for adults in your community.
Adults who have experienced being broke, bankrupt, or even had a foreclosed property can still learn to manage their finances better. The key to teaching adults about money is making the lessons entertaining so people will stay focused.
One way to bring financial literacy to adults is through a story format similar to the very successful “Dear Abby” column. These tales are based on real-life experiences but have been fictionalized for readers who may recognize themselves or others they know in these stories. Readers will feel a connection to the characters and a genuine interest in resolving their money problems.
Adults can also learn about money through games. It does not matter if the game is fun or serious; adults will play games that teach them about finances just as long as they are entertaining, engaging, and interesting.
4. Offer free workshops on how to manage personal finances and create budgets.
Calendars, worksheets, and templates can do wonders. It gives individuals a pattern to follow when trying to manage their own finances.
Use a savings group as a medium to teach how certain financial products work.
5. Work with local banks to provide loans and means of investment.
Form a partnership with a bank. Banks can offer their customers incentives for opening a savings account. This will encourage savings and show the community that banks are willing to help them succeed financially.
Financial literacy is much more than knowing how to read a bank statement or balancing a checkbook; it’s an understanding of all aspects of money, from saving and earning to investing and borrowing.
The more that people have an understanding of how money works, the better their decisions will be. If they can save for emergencies and provide for retirement, they will experience financial security. The benefits of financially literate communities are many.
6. Provide low-interest savings accounts.
Low-interest savings accounts will encourage people to save their money instead of spending it impulsively. Make it easy to deposit and withdraw cash so that people can access their savings when they need them.
Provide low-interest loans for people who need capital to start businesses or finance education. Your community leaders can encourage local cooperative development of financial institutions with lower transaction costs than private banks.
Financial literacy is an important lesson that communities can benefit from. It’s not just about learning to handle money so that you can stay out of debt but also about how you can save and invest for the future. This way, community members can manage their family’s money and maybe even open small businesses that benefit other people.
The good thing about this is that it has a snowball effect. Having a community that understands how money works mean this community will have a better chance at thriving and being prosperous down the road.