Banks Have a Responsibility to Teach Financial Literacy
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When we were young, it felt like most of our parents' time was spent trying to remind us of a few well-worn lessons to help us lead good lives: look both ways before crossing the street, brush your teeth, do your homework, eat your vegetables.
Unfortunately, one basic lesson is often not passed from parent to child: save your money. As leaders in the banking industry with strong beliefs in responsible finance, we feel it is our duty to provide clients and the communities we serve with financial education tools and resources, so that the next generation is equipped to lead fiscally responsible lives.
As we look to place our children in a stronger position to compete in the challenging global economy, it's our industry's responsibility – and ultimately in our best interest – to reinforce the message that fiscal health is as vital as good nutrition or academic success.
There's work to be done. According to a Sallie Mae survey, about half of senior girls shopped for two or more weeks to pick out their prom dress and half of senior boys spent two or more weeks deciding whom to ask. In contrast, nearly half of high school seniors spent five or fewer hours learning how to pay for college.
Every April for the past 14 years, Citi has supported the American Bankers Association's "Teach Children to Save" program. All of us across the banking industry who support this and other financial education initiatives know that the sooner our clients start to save and adopt good financial habits, the better chance they will have of leading stable and successful financial lives. Our industry plays a key role in helping to improve consumers' financial literacy so they can make informed decisions and begin building and preserving their assets.
For most people, even those in banking, talking about money with those close to us – let alone our children – is uncomfortable. And often, with all the other lessons we need to teach our children every day, talking about dollars and cents doesn't always make it to the top of the list. A recent survey from Citi Community Development and Parenting Magazine revealed that while nearly 40% of parents actually talk to their children about money, it is not a regular topic of conversation in the household and brought up only as "the need arises."
The continually challenging economic conditions mean these conversations can no longer be delayed. With the economy showing cautious signs of improvement, those with sound financial know-how will be best-positioned to grasp the American dream as the economic tide rises – whether it is the dream of owning a home, starting a business or leaving a nest egg for your children.
We must not forget that an early introduction to and understanding of words like "earning", "credit", "income" and "investing" will pay enormous dividends down the road. Our recent Citi survey revealed that of the lessons parents want to instill in their own children, 57% said that saving for the future was the most important followed by household budgeting at 44%. As bankers, we have a shared obligation to help Americans understand their finances so they can pass along these vital lessons to their children.
Teaching our customers and their children about how to save for college, plan for retirement and recognize the need for an emergency fund is not just a nice thing to do – it also makes good business sense. Building a nation of savers will keep more money in our economy, make responsible credit more accessible and improve resiliency when setbacks occur.
While more needs to be done, there are already some programs that are effectively linking financial products with the education necessary to use them responsibly. In 2011, Citi joined the City and County of San Francisco to launch a program called "Kindergarten to College." It helps every incoming kindergarten student in the San Francisco Unified School District open a college savings account and even matches a portion of the funds. Equally important, the Citibank college savings accounts are linked to a financial education curriculum, so that students learn not just how to save, but why. We believe in this program because research shows that those who start saving early are seven times more likely to go to college than those who do not save.
Generations always hope that their successors will be better off and that one day they are able to buy homes of their own, send their kids to college and enjoy their retirement years free of anxiety. Programs that reinforce the special responsibility we all share to help create a nation where access and opportunity start with an early appreciation for the ABCs of personal financial management.
Cece Stewart is president of the Citi U.S. Consumer & Commercial Bank and Robert Annibale is global director of Citi Community Development.