Just because a kid has a bank account, it doesn’t mean she knows how to manage it.
A recent report by the Organisation for Economic Co-operation and Development (OECD) suggests that many teens aren’t financially literate. The findings, released in May 2017, are from an international student assessment which tested 15-year-olds in several countries.
On the assessment, 22 percent of teens scored below the financial-literacy “baseline level,” and only 12 percent scored at the highest level, according to a story published at Bloomberg.com. The mean financial-literacy score for U.S. teens was very close to the OECD average. The U.S. ranked seventh among the 15 participating countries and economies.
The assessment covered various financial skills, from reading invoices and recognizing a bank phishing email to deciphering a pay slip and reading stock prices recorded over time. While 56 percent of the teens studied reported having a bank account, nearly two out of three of those teens didn’t have the skills to manage their account.
The dismal results spell opportunity for financial services. Give a kid a bank account, and she’ll have a safe place to keep her birthday money. Teach her to save and invest and she may reward you with a lifetime of business.
Credit unions have long sponsored personal finance programs for youth. They lean on proven curriculum from Junior Achievement and National Endowment for Financial Services curriculum to familiarize kids with the credit, savings, budgeting and investments. Some even have student-run branches to teach bank management in addition to promoting thrift.
And the courses work: high school seniors who take personal finance are more likely to save money, and have a budget and invest, according to a Discover survey.
Three ways for financial brands to connect with Gen We:
Get involved in the schools.
Your future customers are in high school. Help prepare them for the world—and your products and services—by volunteering in the classroom. Financial literacy is the ultimate brand fit. In addition to NEFE and Junior Achievement. Jump$tart Financial Smarts for Students has aggregated an online library rich with vetted personal finance classroom materials.
Seize teachable moments.
Many banks and credit unions have programs aimed at elementary-age children. The promotional items come quarterly, courtesy of a cutesy mascot and an opportunity to win tickets to an amusement park. While this tactic may have worked a couple decades ago, it falls flat on today’s tech-savvy generation. What’s more, these programs tend to fizzle out after third-grade.
Instead, shift your promotional budget to high school. This is the age when kids are becoming much more aware of money. They want stuff and want to do stuff—much of which comes with a price. Help them become good consumers by seizing any opportunity to counsel them. Yes, invite them to sign up for a checking account, and help them understand lending when they apply for a car loan or college loan. Credit is another teachable moment. While one-on-one conversations are far more personal, you can host youth seminars to reach a wider audience more efficiently.
Create Gen We-friendly products.
Gen We is growing up to be particularly entrepreneurial. They’re also more influential than previous generations on the family budget, according to CEB Iconoculture research. Rather than attempt to squeeze them into existing financial products and services, build a suite around them and market accordingly. Provide rewards and incentives for first-time borrowers and positive credit behaviors.
For more on marketing to Gen We, check out 5 things you need to know about Gen We.