For the past three years, my financial planning firm has had the privilege and pleasure of sponsoring multiple financial literacy rock concerts in our local area. We partner with the charitable organization Funding the Future to provide an innovative and fun way for kids to learn some hard truths about money.
Funding the Future was created several years ago by Gooding, the lead singer of the band GOODING. Over his many years in the music industry, Gooding has seen many performers rise and fall when it comes to having (and keeping) money.
At the schools, the band performs a short concert, which is high energy and puts the kids in a happy and open frame of mind. After the concert, they don’t get a lecture from a teacher or other boring adult. They get to hear about financial topics from a rocker – a cool, smart, and talented guy who has been in the trenches and remembers what it was like to be their age and in school.
Gooding talks about how he never learned much about money growing up, and how, as an adult, he faced financial challenges. Fortunately for Gooding, he realized the slippery slope he was on and made some important changes in his life: He got out of debt and started saving part of his income regularly.
The literacy talk at these programs is meant to plant some important seeds. Messages about avoiding credit card debt, protecting your credit score, and saving for your future are shared with humor and real-world tough love. Gooding also touches on the importance of setting goals to achieve your financial dreams, which thrills a goal-setting zealot like me!
But really, why bother trying to reach kids in middle and high school, when they are busy being kids and dealing with the numerous other challenges associated with growing up?
Financial literacy can help fix our communities
Perhaps the most important part of Gooding’s talk is his focus on fixing our communities. Most often, we identify a spectrum of negative influences taking a toll on our communities. But a lack of financial literacy is seldom one of the negative influences that is highlighted. The recognition that this fact should change evolved into the mission of Funding the Future.
While there are many factors involved in the obstacles facing our communities, here are a few contributing challenges.
You probably have heard or read all the statistics regarding divorce. Disagreements over money are one of the leading causes of divorce in this country. Divorce often results in broken families, and broken families – if for no other reason than you have two households to support instead of one – are immediately at a disadvantage when it comes to the economics of running a home. While it might not be a cure for marital issues, if people had more knowledge about the basics of how money, debt, and the economy worked, they would be more likely to factor in the economic issues created by divorce. Some might even be able to work out their marital money problems and keep families intact.
Credit cards and “payday” lenders
The unwise use of credit, particularly high-interest-rate credit cards, can quickly lead people to financial collapse. Add to that the allure (not to mention tricky advertising and microscopic fine print) of “payday” lenders. These are also known as “same day” lenders, and while illegal in my home state, they are plenty prevalent, particularly in low-income neighborhoods around the country.
Initially, seeing a payday lender on your street corner, or an advertisement for one in your mailbox might seem like an angel of mercy. If you’re short on cash to cover your bills this month, the opportunity to get a fast and easy loan is tempting. But if you’re even a tiny bit late with a payment or otherwise violate the fine print of the loan, the interest rates and penalties pile up swiftly. And not just to double-digit interest rates. The rates charged can exceed 1000% per year. A very small loan can rapidly turn into an insurmountable debt.
Another issue spiraling out of control is student loan debt. While obtaining higher education in some form is a worthy goal, the pitfall is when we’re suckered into financing our education with loans that seem innocuous at first, but eventually become an economic noose around our necks.
Buy now, pay later mentality
As a society, we are now raising generations who have zero connection to a time when financial management was handled without the use of consumer credit. In the past, our older and wiser generations had to actually save up for their desired purchases. Today’s youth are surrounded by the ease of buying on credit, which has eclipsed the idea of not purchasing something if you do not have the money. It is easy to tell yourself, “Oh, I’ll have enough money by the time the bill comes due.” But that is often an illusion.
We must break the cycle
To fix these financial societal messes and help mend families and communities that have fallen prey to misleading advertising and lack of knowledge about money, we must reverse the trends. We must break the cycle of financial illiteracy, and that means starting early. Kids need to learn the basics and start practicing the skills of solid money management long before the fast-and-easy credit vultures move in for the kill.
Funding the Future has begun the battle against financial illiteracy, and you can help as well. If you feel at a loss for how you could make a difference, even if you do not have young children in your home, here are a few ideas:
Help the children in your life: Be a good role model when it comes to money. Teach them early and often about basic concepts like saving and avoiding debt. Talk openly with your children and children you know about your financial struggles and what you are doing to overcome them.
Volunteer with local non-profit agencies: Help people of all ages improve their financial literacy by volunteering in your community.
Improve your own financial literacy: Feel like you don’t know enough? Start with SimpleMoney’s website. There are also a million other online resources that can help you learn the basics. Don’t get swept up with exotic financial concepts and investments. Just stick with the basics.
Support Funding the Future with your time: Ask how you can bring this program to your local schools and to your community. Remember to ask local businesses to sponsor the concerts! Learn more about Funding the Future by visiting their website. You can also read Gooding’s manifesto about financial literacy through his blog on his band’s website.
Support Funding the Future with your money: If you are doing well yourself and like to support worthy causes, consider adding this one to your donation list this year.
(As a disclaimer, I am not in any way compensated by Funding the Future or GOODING to promote their cause. I have long been a proponent of youth literacy, and I’m now a regular sponsor of Funding the Future concerts in local schools.)
What are your thoughts about financial literacy? Share below your thoughts and ideas of how we can work to break the cycle of financial illiteracy. Or if you want to start a discussion with some like-minded friends, join the free SimpleMoney Community on Facebook to share your ideas!
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