There is a lot of emphasis during the month of April on teaching financial literacy to youngsters. But what learnings actually stick with them to adulthood?
We checked with millennials who work at Bank of the West about some of the best financial literacy lessons they learned. Their insights may give us all some useful guidance for helping future generations to learn.
“One of the most important financial literacy lessons I’ve learned was to start establishing my credit history early,” said Jennifer Trumpp. While she is thankful to have made it through college without debt or credit cards, she discovered a new challenge while trying to find a place to live.
“I went to rent my first apartment at age 22, and they wouldn’t rent to me because I had no credit score,” she said. “I’m spending my twenties trying to build up my credit score so that when I am ready to buy a house my credit will be a non-issue.”
The importance of saving money was a common theme among many of the millennials I heard from.
Christen Frank said she learned from her grandfather to “pay yourself first.” His suggestion was to set up an automatic transfer of 10% from each paycheck into her savings account. “You’ll never miss it,” he said of the transferred amount.
Saving for retirement by contributing to a 401(k) was another common priority.
Rule of 72
Keegan Witte shared a similar sentiment, saying the “Rule of 72” about the power of compounding interest was an important lesson that showed the benefit of saving early.
He explained it this way: “Take the estimated rate of return and divide it by 72 to get the number of years it would take your original balance to double, assuming no additional funds. A 10% rate would take 7.2 years to double. At 1% it would take 72 years – yikes!”
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