And Why CBC is Doing Something About It.
Financial literacy encompasses understanding and effectively managing financial matters such as budgeting, investing and debt management. It involves having the knowledge and skills necessary to make informed financial decisions aligning with personal goals and values. Financial literacy is paramount to the success of our communities and local economies.
In the swiftly evolving global economy, technology is revolutionizing the financial landscape. As novel financial products and services emerge, having the necessary knowledge and skills to adapt is crucial. It is essential for individuals to know where to access the information required to become financially literate in this fast-changing world. Grasping the fundamentals empowers individuals to seize the opportunities arising from financial shifts and steer clear of potential pitfalls.
Is There a Need for Financial Literacy in Education?
The need for financial literacy in education arises from the need to promote financial knowledge more broadly for the benefit of the public. According to a Financial Industry Regulatory Authority (FINRA) study, most American adults reported having financial anxiety and lacking basic financial literacy skills.
They need a greater understanding of concepts like interest rates, compound interest, inflation and risk diversification. The lack of financial literacy leads to poor decision-making, financial stress, debt and insecurity. And in some cases, financial ruin.
The demand for better financial education among students is also on the rise. As students approach adulthood and start making financial decisions, they must have the necessary knowledge to manage their finances. However, financial literacy education is not a standard part of most school curricula, as only seven states require high school students to take a personal finance course. We must do better for our communities and the next generation.
The Value of Financial Literacy
The importance of financial literacy cannot be overstated, and its benefits extend beyond personal finance. Here are some ways in which financial literacy can add value:
- Improved personal finance management skills — Financially literate individuals have the skills to manage their finances effectively. It includes creating and sticking to a budget, managing debt, understanding credit scores and how best to use money.
- Better decision-making skills — Becoming financially literate will allow more people to understand the risks and rewards of different financial products, evaluate investment options and assess the long-term impact of financial decisions.
- Reduced risk of financial scams and fraud — Financial literacy will help people recognize the warning signs of fraudulent activities.
- Preparation for live events like emergencies and retirement — With adequate financial education, people can plan for expected or unexpected incidents by saving and investing money wisely.
- Contribution to the economy — Financially literate individuals can make informed decisions that enrich the economy through growth and development.
Incorporating financial literacy education into educational curriculum can equip students with the necessary knowledge and skills to make good financial decisions and secure their future, leading to economic growth and prosperity.
4 Strategies for Improving Financial Literacy in Education
With many individuals struggling to make better financial decisions, it’s vital to equip students with the knowledge they need to successfully navigate the world of personal finance. The following are strategies that schools and other educational institutions can implement to improve financial literacy.
1. Introduction of Financial Literacy as Part of the Curriculum
Financial literacy education prepares students to make sound financial decisions and manage their finances. Unfortunately, financial literacy is often overlooked in many school curriculums.
Students can learn the basics of personal finance by incorporating financial literacy into the school curriculum. This knowledge is a foundation for making informed financial decisions and helps them avoid common financial mistakes that can have long-term consequences.
2. Encourage Financial Education Programs Beyond the Classroom
Students, especially those lacking access to financial education at home or school, should be motivated to partake in financial education programs. By providing students with additional financial literacy resources, students can have the knowledge and skills they need to succeed in today’s complex financial landscape.
Community organizations, libraries and financial institutions offer financial education programs that students can attend. These programs cover financial literacy topics like debt management, customizable to different age groups and learning levels. These programs also allow students to network with financial experts and gain valuable insights into personal finance.
3. Educate Parents and Guardians to Support Financial Education at Home
Parents and guardians are often students’ primary role models and can significantly impact their attitudes and behaviors toward money. Schools can host family events focusing on financial literacy, such as a financial literacy fair or a family finance night. These events allow parents and children to learn about personal finance together and reinforce the importance of financial literacy.
Schools can also offer workshops or information sessions for parents on how to teach financial literacy skills at home. These sessions can cover different topics, providing parents with practical tips and strategies for teaching financial literacy skills to their children.
4. Partner with Financial Institutions to Provide Resources and Support
Financial institutions have a wealth of knowledge and expertise on personal finance and can provide schools with valuable resources and support to help students develop essential financial skills.
Financial institutions can develop tailored resources and educational materials to meet the needs of different groups and communities. For example, they can create resources for seniors, young adults or immigrants with unique financial challenges.
Banks and financial institutions like Commercial Bank of California (CBC) support financial literacy by providing educational workshops and seminars for students, and the chance to hear from financial advisors or bankers who share their knowledge and experiences.
How CBC is Making an Impact
CBC is a community-focused bank that recognizes the importance of financial education for youth and has taken steps to support financial literacy across our communities.
As a bank with a strong commitment to financial education and community empowerment, Commercial Bank of California has partnered with more than a dozen organizations to start financial literacy programs for their various audiences.
We have programs currently running with educational institutions like California State University Fullerton and the Samueli Academy (a public charter school in Southern California). We have also partnered with some unique community organizations and customized financial literacy classes for their audiences and environments, such as Discovery Cube Museum, Court Appointed Special Advocates (CASA), Laura’s House and Junior Achievement.
Our Solution, Your Success
At CBC, we offer banking products and services, including business and personal banking, lending, and treasury management. We are known for our personalized banking approach and commitment to building long-term customer relationships.
Whether you’re interested in our financial literacy programs or banking services, we have the tools and expertise to help you. Contact us today, and become an esteemed client.