Financial Literacy for Youth in Foster Care
Last year, household debt in the United States hit a record of $14.6 trillion, and roughly 340 million Americans share that debt.
Landing in debt is becoming the norm for many families, but it doesn't have to be. Teaching foster youth about financial literacy can help them make smart decisions if you're a foster parent. It's also easier than you think, and you might learn something from this guide.
Find out why financial literacy for youth in foster care is so critical and how you can teach them good money habits. The foster care system has not focused well on the youth aging out of foster care. Hence, giving foster youth financial capability is important in all the future financial decisions they will have to make as they transition from foster care.
Foster Kids: How to Ensure They Still Get a Financial Education
Financial literacy is simply the ability to understand and apply financial skills. Financial literacy includes budgeting, investing, managing finances, using credit cards, and understanding credit reports, among other skills.
These vital skills provide many benefits, such as spotting and avoiding financial fraud or accumulating too much debt.
The Federal Trade Commission received 5.88 million fraud reports in 2021. Common types of financial fraud include identity theft, cashier's check fraud, tax refund fraud, etc.
You want to raise your kids to question suspicious situations that could be a form of fraud.
Obtaining a quality education is also tough for foster youth. According to the U.S. Department of Education, foster youth are at a higher risk of dropping out of school and are less likely to attend or graduate college.
Nowadays, a high school diploma or equivalent is a requirement for most jobs. Foster kids that drop out or don't get a good education are more likely to struggle with finding a job that can support them. Child welfare agencies and education agencies are taking great strides to ensure foster youth receive a better education, but it's also up to foster families to help.
Plus, money-management skills are a part of daily life. Kids don't usually learn financial skills in school, but they still need to know how to do the following:
- Pay bills
- Create a budget
- Take out a loan
- Write checks
- Fill out their taxes
- Save for emergencies
- Choosing the right bank account
- Understand financial terms (APR, FICO score, asset, equity, etc.)
These are skills we need throughout life, and not knowing how to check a credit score or fill out your taxes can have severe consequences. That's why financial literacy for youth is so crucial to helping them succeed.
As a foster parent, here are some steps you can take to ensure financial literacy for youth in foster care.
Give Them the Right Books
Each parent will have different methods of teaching kids about the value of money. Some will give them a set allowance or money for a specific purpose, such as buying lunch. However, not all parents find teaching easy.
If you're unsure what to say or how to get certain topics to stick, try checking out some kids' books on finance. Some are best for younger kids, while others are for a teen audience.
Use Educational Programs
Educational programs can teach your kids all sorts of financial skills, including saving, borrowing, investing, and much more.
The FDIC has a Money Smart financial education program for all ages. Both you and your foster kids can learn new and valuable tips to help you stretch your dollars further. The resources on the FDIC website include interactive games, guides, tips, programs, and more.
The interactive games are great for kids who don't find the topic particularly interesting, as it's more fun. Kids will learn how to pay bills, file federal and state taxes, fill out income forms, understand pay periods, and much more. There's a lot of information on their website that parents will find useful, including tips or facts they may not have known!
In addition, there are plenty of free financial courses available online. These classes teach people to hone their money-management skills, improve their financial knowledge, and make smarter decisions.
Listen to Money Podcasts
Financial podcasts are usually free, and there are a ton of them out there. You can find them on Spotify, Apple Music, or anywhere you regularly listen to podcasts. Some are geared toward beginners and those unfamiliar with financial basics, while others cover more advanced topics.
Load up on a few episodes before taking your foster kids to school for the day or on the way to games or appointments. It's a great way to kill time while waiting in the car, and you can both learn that way.
Consider subscribing to other related topics, such as the economy, investing, crypto, etc. Find one you both like and make it a tradition to listen together.
Find Free Resources From Your Local Library
Your local library contains books, DVDs, audiobooks, magazines, and more on financial subjects. If you're on a tight budget, take them to the library and check out a few as resources. Getting a library card is free; you can teach your kids the importance of reading and how to find books in the library.
As a bonus, checking out books from the library teaches kids about responsibility. It's up to them to care for the books, DVDs, or other resources in their possession and to return them on time (or pay the fee).
Libraries also offer educational programs that are often free to attend. Check out their calendar of events or ask your librarian if any youth programs or financial programs are available.
The Consumer Financial Protection Bureau is working with libraries to improve financial education. The goal is to help parents and kids find financial education tools, webinars, and publications.
Financial Literacy for Youth in Foster Care
Now that you understand the importance of financial literacy for youth in foster care and have some ideas on how to teach them, we hope you help your kids understand the value of money management.
Are you ready to take that step and become a foster parent? You can find plenty of resources and information on our website. When you're ready to contact us, fill out our online form.