By Kelsey Havemann
The financial illiteracy crisis is stubborn. The 2024 TIAA Institute-GFLEC Personal Finance Index reports that only 48 percent of Americans understand basic financial principles. States are continuing to pass laws for graduation requirements to include a standalone personal finance course. But that’s not enough.
The good news is banks have a role to play in moving the needle on financial illiteracy.
Banks are uniquely positioned to jumpstart a positive societal impact and improve the financial health of their communities. Even better news: Efforts that banks put forth can create a direct benefit for the bank. Better-informed customers typically create more-involved and active customers. Providing education and opportunities for banks’ younger patrons fosters loyalty. Then those young adults transition into lifelong customers. Creating this win-win cycle may be easier than it looks.
Here are simple solutions that banks of any size can easily implement to make an impact:
Make financial literacy prominent on the bank website: There are numerous free resources available, so banks don’t have to reinvent the wheel. Outline a few key topics, such as: creating a budget, protecting your financial information, saving for emergencies, recognizing fraud, affordable housing opportunities, etc. Then link folks to bank materials as well as reputable articles, blogs, information from the FDIC, CFPB or OCC. There is plenty of information available. Customers just need banks to put it in front of them. Remember: Simple, straightforward content is what will stick.
Offer financial education presentations/lessons in the community: Start with schools, community centers, local colleges and non-profit groups. Utilize free, existing materials from expert organizations. Next Gen Personal Finance and FICO have extensive libraries of lessons on a variety of topics. Better yet, register for the ABA Foundation (free to any bank) and gain access to free turnkey resources for any age through our Teach Children to Save, Get Smart About Credit and Safe Banking for Seniors programs. Plus, you’ll have access to the ABA Foundation team to guide you and help you with all the questions you may have!
Partner with allied organizations: If your goal is to provide education directly to your community, but your bank does not have the bandwidth right now, partner up. Identify local organizations already serving the populations you want to focus on and offer your bank expertise, along with free resources, to reach those in need. Alternatively, you can also connect with companies specializing in financial education programs such as Banzai or Everfi that can work with your bank to provide tailored community solutions.
Looking to build out a more full-scale program from the ground up? Banks can check out the path Bank of America has forged. They expanded their SafeBalance Banking product to now offer a SafeBalance Banking for Family Banking solution. This is a parent-owned account designed to give children hands-on experiential banking using a debit card. The account offers flexible parental controls to customize spending limits, monitor account activity and set up transactional alerts. Through this new offering, children as young as six can have access to online and mobile banking. Then at 16, they can transition to become the sole account owner. The account comes with access to Bank of America’s extensive online financial education library, through their Better Money Habits program.
This new account option provides for guided financial decision-making opportunities at a young age, which not only empowers children to grow with real-life financial experience, but it also creates an educated customer for years to come.
Regardless of how banks choose to promote financial literacy in their own communities, the essential takeaway is to get started. Banks that need help can reach out to the ABA Foundation. We’re in this together!
April is Financial Literacy Month. Check out free resources from ABA Foundation here.
Kelsey Havemann is senior manager for youth financial education for the ABA Foundation.
