As Arizona’s State Treasurer, Kimberly Yee oversees a $40 billion state budget, manages $16 billion in assets and makes disbursements to state agencies, local governments and schools. She is also a mom with two young sons, and she has long been concerned that kids today are not learning the financial skills they need to ultimately be successful.
Yee was one of many supporters behind legislation to make financial education mandatory in Arizona high schools. High school students now must learn to balance a checkbook, understand the consequences of credit card debt and more.
“Financial education empowers young people to achieve financial freedom so they can attain their personal and professional goals,” Yee explains. “With [financial] freedom, our young people can achieve anything.”
Yee answered our questions about making financial literacy a priority. Her responses have been edited for length and clarity.
Why are you so concerned about today’s kids being financially literate? Financial education is so important as a basic life skill. If we teach children at a young age about smart money practices, they will be responsible with their money as adults. I have made financial literacy a cornerstone of my administration, because the fiscal health of our state depends on it.
It is important to recognize that student loan debt in our country stands at $1.6 trillion dollars, up from $1.5 trillion last year. A record 7 million Americans are three months behind in car payments. Nearly 40 percent of millennial women [ages 18-34] say they don’t pay their bills on time, and they are twice as likely as their male counterparts to take out a high-interest loan to cover a $2,000 emergency.
What first made you realize kids are not prepared? Twelve years ago, when I worked as a staff member in former Arizona State Treasurer Dean Martin’s administration, I visited students at [an Arizona] university during their orientation week. I saw the credit card companies lined up to help those students open their first credit card accounts. I asked the students at that orientation whether they’d applied for their first credit card, and most of them raised their hands. When I asked whether any of them had ever taken a personal finance course, sadly, none of the students raised their hands. That’s when my passion to improve financial education began.
How can parents start teaching kids about money and saving? Parents can teach their children the importance of earning money by compensating them when they do chores around the house. When children learn that it takes work to earn money, they can appreciate the value of money and be mindful of how they use it. For older children who are learning how to spend money, it is helpful to use the envelope system that allows them to categorize the funds. One envelope can be for giving, another for saving and a third for spending. As children see the money being spent, it encourages them to keep doing chores to earn more money or to start slowing down their spending. I also encourage parents to start personal savings accounts when their children are born and to consider a 529 college savings plan so they can begin early on to grow their money with interest.
What did you do with your own kids to teach them to be financially literate? My children earn their money by doing household chores, and they put aside money to save and to spend. I teach simple concepts like the fact that saving money for a longer period of time will buy a bigger toy, so we’ll circle a picture in a toy catalog and work toward buying that toy over time. For little purchases, we’ll go to the dollar store so they can understand that each dollar means one toy, and they can count their purchases with each dollar. I have also taught them about giving to others and I show them pictures to provide examples of how their money can be used to help people.
Do you think kids should have access to savings/checking accounts or credit cards before college? Yes. I encourage parents to start savings accounts for their children early on. When their kids are in junior high and high school, they should establish joint checking accounts so children learn how to deposit and withdraw money with parental supervision. This is a perfect time to begin teaching older children how to balance a checkbook.
How important is balancing a checkbook in this age of online banking and smartphone apps? The practice of balancing a checkbook and creating a simple budget is a skill needed now more than ever. It is important to keep track of how your money is going in and out. An while it is easy to rely on electronic apps and online banking programs, if there is a mistake, it might go unnoticed.
When does legislation go into effect requiring that kids learn financial literacy? In the first weeks of my new administration, I put forward legislation that requires high school students to have a course on personal financial management during their economics semester. For many years, Arizona students were not required to have any kind of financial education before graduation. Schools offered these classes as electives, so we missed a lot of students who didn’t know the first thing about managing their money. S.B. 1184 went into effect in August and this is the first school year when financial education must be included. Students will be equipped to manage their money and be ready to survive in the real world.
What other specific financial skills do you think kids need to learn before college? Parents can engage their children in simple things to learn about saving money. For instance, show children what your household utility bill looks like month to month. Make it a family goal to decrease utility usage with the goal of getting a smaller bill in the mail the next month. You’ll soon see children start turning off the lights in empty rooms and helping as a family unit to save a little money. A nice incentive for the children is to buy them a little treat with the money that is saved from the lower utility bill.
What would you like to add? This past June, I formed Arizona’s first-ever Financial Literacy Task Force to ensure that all Arizonans, from all walks of life, can attain a better grasp of how to manage their finances. We want to help advance financial education for students, emerging adults, senior citizens, vulnerable families, veterans and military families and more. Everyone deserves to achieve financial freedom.
