Financial education is integral to workforce readiness and overall life skills success, which is why it’s important for young people to understand financial basics, especially by the time they enter the workplace. Whether the goal is to manage a first paycheck, build savings and credit, own a home, start a business, or make a difference in the community, financial education and resources can help young people get on the path to achieve those goals.
In Utah, a financial education course is required for high school graduation, providing students with a foundation they need to learn how to manage money and build basic life skills. WalletHub ranked Utah as the second-most financially successful state in the United States.
However, despite the impressive ranking, the survey also revealed that Utah residents rated their own financial knowledge much lower in comparison to their out-of-state counterparts. In fact, Utah was ranked 31st out of the 51 states and territories surveyed throughout the country. These results show the significant need for improved access to financial education in Utah.
The good news is there are helpful and free resources available for every stage of one’s financial life. One example is Bank of America’s Better Money Habits, a free online platform of easy-to-understand tools and content, in both English and Spanish, to help people understand their money, make confident choices, and improve their financial health.
So, what do students and young adults need to know most? Here are six steps to help young people create and stick to a budget:
- Calculate your net income. The foundation of an effective budget is your net income, which is take-home pay. Focusing on your total salary instead of net income could lead to overspending because you may think you have more money available than you do.
- Track your spending. Once you know how much money you have coming in, the next step is to figure out where it is going. Tracking and categorizing your expenses can help you determine where you are spending the most money and where it might be possible to save.
- Set realistic financial goals. Make a list of your short- and long-term financial goals. Short-term goals should take around one to three years to achieve and might include things like setting up an emergency fund or paying down credit card debt. Long-term goals, such as saving for retirement, may take decades to reach.
- Make a plan. List your fixed expenses (i.e., regular monthly bills such as rent or car payments) as well as your variable expenses (i.e., spending that changes from month to month on such things as groceries and entertainment). Use the expenses you compiled to get a sense of what you will spend in the coming months. Then compare that to your net income and priorities. Consider setting specific and realistic spending limits for each category of expenses.
- Adjust your spending to stay on budget. Now that you have documented your income and spending, you can make any necessary adjustments so that you don’t overspend and have money to put toward your goals. Look toward your “wants” as the first area for cuts as opposed to your needs.
- Review your budget regularly. Once your budget is set, you should review it and your spending on a regular basis to be sure you are staying on track.
To help youth and their families strengthen their financial knowledge, Bank of America bankers in Utah also deliver virtual and in-person Better Money Habits curriculum and financial guidance across local communities and through partnerships with local schools and nonprofits.
For example, Better Money Habits representatives worked with Neighborhood House — which provides quality preschool, youth programs, and adult care in the Salt Lake Valley based on a client’s financial state. Going beyond providing workshops, the bank provided funding to the Suazo Business Center to expand its bilingual training and support for Hispanic-Latino and other minority entrepreneurs as they research, launch, and grow their businesses.
The world can be an exciting place filled with opportunities for our youth, but we must provide the know-how and tools to help them get there.
Kate Moss is senior vice president, market executive, on the Bank of America Utah.
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