The importance of financial literacy for a secure future

October 19, 2017 | GET MORE : Community

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Note: This article by U.S. Bank Chief Social Responsibility Officer Reba Dominski was originally published in The Washington Post on October 16. 

A piggy bank was my very first experience with money. It was simple. I knew that you stuck coins and bills through the slot on the top. But I didn't know what happened to the money that went into the bank. Was it supposed to stay there? Could I spend it or did I have to save it?

The piggy bank is still most kids' initial introduction to saving money. I bought each of my children their own piggy bank when they were babies. As a parent, I know the critical role I play in teaching important money lessons, and it doesn't stop with the piggy bank. It gets more challenging as children come of age and start asking questions about credit, investments and even retirement.

My children, now 15 and 17 years old, face a less certain financial future than I or even my parents did, and they'll need to equip themselves for long-term financial security. It's never been more important than it is now to guide children toward a financially secure future. Even though wages are rising, the pace of growth remains sluggish and the retirement programs many Americans once counted on for their golden years face an uncertain future.

The good news, though, is that all of us can improve the security of our futures through financial literacy. With a better understanding of the basics of finance—how to save, budget and invest—we can increase both our earning potential and our prospects for a solid financial future.

This past summer, my children both landed their first jobs and were excited to start earning an income. It was fascinating to watch them both bring home their first paycheck, only to find it was a lot less than they had anticipated. That day we talked about taxes, what they were and how that money gets spent.

Understanding financial basics is critical, particularly for younger people who are just starting out and can make mistakes that hamper their long-term financial success. For instance, U.S. Bank’s 2017 Student Financial Literacy Study found many students misunderstand credit and what affects their credit score. The majority of students surveyed by the study, for example, incorrectly believed a delinquent loan or credit card balance would be removed from a credit report once it was paid off. That misunderstanding could have a long-lasting impact, affecting everything from their ability to get a mortgage to the interest rate they pay for a credit card.

According to the study, as students build their financial knowledge, the first place they look is online, followed by bank branches and financial advisors. We at U.S. Bank understand that students may want to learn at their own pace and on their own schedule, so we've structured our Student Union scholarship program in a way that incentivizes students to learn. Students that complete the financial education modules are eligible for $20,000, $10,000 and $5,000 scholarships.

If the piggy bank was the first step for many of us, it's important to grow and evolve our financial education as we progress through our careers and our lives. Financial literacy is a topic we all have to work on every day – it's an ongoing education.

Banks like U.S. Bank have an important role to play in ensuring access for all consumers to financial literacy programs. We are working hard to ensure our financial education programs are available and understandable so consumers can get the tools they need to lay a stronger financial foundation for the future.

Reba Dominski is chief social responsibility officer for U.S. Bank and president of the U.S. Bank Foundation.

The 2017 Student Financial Literacy Study was conducted by Latinum Network to uncover insights about students' financial literacy. It included an online survey with 1,628 undergraduate college and high school students ages 18-30 and 21 in-depth interviews.