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CFLM - Financial Literacy News

March 10, 2008

FOR IMMEDIATE RELEASE:

Contact: Leigh Albright
Lents & Associates
314.968.3060
lalbright@lentsandassoc.com

FIRST BANK: FINANCIAL LITERACY IS CRUCIAL FOR CHILDREN
Bank offers valuable money tips for parents

First Bank and other financial experts agree: parents should teach their children to save money and invest when they are young. “Achieving financial literacy among children is crucial so they can develop good personal financial management skills and lifelong habits,” said Susan Montoya, First Bank Vice President and Corporate Community Reinvestment Act Officer.

According to the Jump$tart Coalition for Personal Financial Literacy, teens spent about $160 billion in 2005 and children ages 4-12 were expected to spend $51.8 billion in 2006. Only 38 percent of teens today can pass a basic financial literacy test and only 26 percent of individuals between the ages of 13 and 21 report that their parents actively taught them how to manage money.

“Living within your means is a concept many adults have yet to conquer,” said Montoya. “Children need to understand the basic fundaments of money, debt, and budgeting at an early age. Instilling solid financial skills now will prepare them for life.”

First Bank shares some smart money tips for parents and children:

  • Teach your child that creating and adhering to a budget and savings plan is crucial in order to provide for themselves and their family’s future needs
  • Provide a weekly allowance and give your child the chance to budget for school lunches and special purchases
  • Explain and review your household budget system. Demonstrate what percentage of income goes to fixed expenses (rent, utilities, food, insurance, etc.), what percentage goes to savings (retirement and short-term, unexpected items), and what percentage remains for discretionary and fun purchases.
  • Explain what “borrowing” means, what debt can do, and the pros and cons of credit

In addition, Montoya suggests talking about where money comes from, explaining the difference between “wants” and “needs,” and illustrating that money is not just for spending.

First Bank is one of the largest privately owned banks in the country with over $10.3 billion in assets and 218 locations in Missouri, Illinois, Texas, Florida and California.