Financial capability at every stage (and every month)

I’d like to start off by saying, “Hi, I’m Mike. It’s nice to meet you, and greetings from the team at Kredit Academy!” I also want to welcome you to another National Financial Capability Month, and hope you’re having as awesome a month as we are. (It’s April as of this writing) And, yes, around here we also say Financial Capability Month, not Financial Literacy Month…

I much prefer this term to financial literacy. To me, literacy evokes ideas of recognition, like I know how to read. But that doesn’t specifically speak to why we should read, or what we should read. While financial literacy covers the basics of financial knowledge, financial capability goes a step further. It’s not just about understanding money—it’s about using that knowledge effectively to make informed decisions that enhance your life. Capability is more than just knowing the concepts, it’s being able to use them most effectively to our advantage.

I’ve been able to recognize the difference between coins, dollars, cards, and checks since a young age. That didn’t mean, however, that when I was a kid I didn’t spend every dollar I earned or frequent check cashing places that would charge me for access to my own money. Wisdom is all about the strategic application of knowledge. In the wise words of Bruce Lee, “Knowing is not enough, we must apply. Willing is not enough, we must do.” Turning things back to financial matters, Mycreditunion.gov defines financial capability as, “your ability to put your financial knowledge and skills to work”. I like that definition.

Credit unions have long been steadfast community advocates and this is another example of their commitment to the education and empowerment of those they serve. Over here in Kredit Academy land, we share that mission and focus on bringing that message to the masses starting at a young age. Studies have shown that money habits are formed as early as 7 and, if unchecked, can stick with you into adulthood¹. Other studies will tell you that habits like self-responsibility are developed up to about 9 years old². So it’s imperative that we prepare our children, empower our teens, support our adults, and ensure that everyone is educated to their level along the way.

To that point, let’s discuss a few simple concepts that can ensure we are instilling financial capability at every stage, and every month. (You see how I brought it back to the title? We’ll call that solid foreshadowing.)

1. Educate & prepare our children:

• Model responsible habits & behaviors: The old adage “do as I say and not as I do” just won’t fly. Our children go where we lead them; so it’s better to show them more often than you tell them.
• Start slow & age appropriate: If they can know how to spend it, they can learn how it actually works. Every concept can be broken down to the level of the learner. (Wired does this really well with their 5 Levels series)
• Be consistent: Don’t try to do this all in one sitting. Unfortunately, we’re not in the Matrix and can’t just download everything at once. Small conversations reinforced regularly, will provide considerably more understanding, retention, and application.

2. Educate & empower our teens:

• Model responsible habits & behaviors: Your children are never watching more intently (for your flaws) than when they’re teenagers. It’s okay, and honestly essential, to be vulnerable enough to admit that you’re not perfect but you’re just trying your best to make quality financial decisions. That helps them see that they should too.
• Give responsibilities & don’t steal their consequences: Experience is a valuable teacher, so when their safety isn’t in jeopardy, we aren’t helping them grow by stopping them from seeing the natural outcomes of their decisions. Whether it’s managing their own money, or saving for their own goals let them see what happens when they do it well, or not at all.
• Find ways to learn together: Also along the lines of vulnerability, if your kid can see you overcome struggles, deal with uncertainty, and practice problem solving, they can learn from your example. They might even teach you something too.

3. Educate & support our adults:

• Set goals, track progress, & celebrate along the way: This is the moment to create a vision for the future that can serve as a guiding light. Don’t get discouraged by how long things will take, focus on methodically fulfilling each step of the journey ahead, and the outcome will consistently become closer.
• Showcase the value of positive habits & the downfall of lacking them: There comes a point when we can grasp how our actions have a lasting impact. In the words of Michelle Obama, “Life is practice, and every day you’re practicing who you’ll become.”
• Motivate, celebrate, and instill confidence: Unfortunately, as adults, we may have already been beaten down by past experiences and locked in some pessimistic viewpoints. Unless we’re dying right now, there’s always time to start over and do better.

Okay, I’ll get off my soapbox now, thanks for letting me vent. It doesn’t matter if we’re teaching our children the value of money, guiding our teenagers through their first financial decisions, or setting personal milestones as an adult, every step we take builds towards a more capable and financially free future.

At Kredit Academy, we are committed to supporting this journey with tools and resources designed specifically for families and Generation Alpha. Want to see how we can work together with your credit union to foster early financial education and establish beneficial habits? Check out Kredit Academy’s suite of products and/or request a demo to see how we can help you establish positive habits and establish early accounts, and make financial capability a lifelong pursuit.