Financial literacy: getting down to the basics.

Two banks that have been recognized for the scale and inventiveness of their efforts explain how they put together their educational offerings and how their programs help to cement relationships with their current and future customers.

HERE'S THE REASON WHY BANKS SHOULD EMPHASIZE FINANCIAL LITERACY: A financially literate customer is someone who will make monetary decisions that are good for himself and for his community--and good decisions can only help the financial institution. For this reason, banks have long sponsored financial literacy training, especially for young people--who will be tomorrow's citizens and bank customers. And, financial literacy education is an effective way to strength the banks links both to its customers and its community.

  The recession of 2008 accentuated the fact that there
  is still a long way to go in terms of adequately educating
  people about common, ordinary financial matters. Witness,
  for example, the number of people who eagerly bought a
  house late in the boom without taking into consideration
  the fact that values are capable of falling as well as rising.

The recession and its fallout have encouraged banks to bolster their financial literacy outreach. In this article, ABA Bank Marketing magazine profiles two banks that have energetically pursued new ways to raise the level of financial know-how in their communities.

The first, profile subject is of First National Bank Texas, Killeen, Texas, which teaches young people about financial management and entrepreneurship by encouraging them to run their own lemonade-stand businesses. The second deals with the work at Cape Cod Five Centers Savings Bank, Orleans, Mass., which has expanded its financial education program to include people of all ages: senior citizens and other adults--in addition to young students.

Their two stories follow below.

Kids Learn about Entrepreneurship One Glass of Lemonade at a Time

Amanda Stephens

Assistant Vice President

First National Bank Texas

Killeen, Texas

Asset Size: $1 billion

This learn-by-doing entrepreneurship/financial literacy program for youngsters features a twist--a lemon twist, you could say.

The bank sponsors and organizes an annual Lemonade Day in which hundreds of children scatter throughout the city and set up their own functioning businesses in the form of lemonade stands. In the process, the kids learn the basics of both money management and entrepreneurship.

[ILLUSTRATION OMITTED]

[ILLUSTRATION OMITTED]

The experience teaches participants firsthand that hard work can produce financial success, says Stephens. "Money management suddenly becomes very exciting"

The dynamic event also generates television, radio and print media coverage, which helps to boost the banks community visibility.

Participation has been growing by leaps and bounds. Three years ago, the first event drew 750 youngsters. This year, there were 2,000. "Each year our goal is to increase the number of children impacted by this unique learning experience, giving them the tools and confidence to accomplish their dreams," says Stephens.

Prior to 2010, the bank did not have a formal, on-going financial literacy program for children and was searching for something that would encourage a high level of involvement by the Greater Killeen/Fort Hood community. While attending a conference, Stephens learned about the nonprofit organization Prepared4Life, in Houston, which at the time had introduced the Lemonade Day program in four cities around the country. "A light bulb went off in my head," Stephens says. Although typically, Lemonade Day is sponsored by a nonprofit organization, First National Bank Texas decided to take the lead in funding, planning and managing the event together with other community partners in Killeen/Fort Hood.

Kids from kindergarten to high school are eligible to participate. Children register with a 'caring adult," usually a parent. Upon registration, they are given a free Lemonade Day back-pack, which includes guidebooks including an "Entrepreneur Workbook" which is described as the "heart" of the experience. The workbook covers everything from finding an investor to the importance of having a savings account. It discusses the importance of being socially responsible by choosing a charity with which to share a portion of the profits. The book also explains the basics of running a lemonade business: how to create a stand, pick a viable business location, do marketing and advertising, mix an appealing lemonade product, and price the product.

The bank normally begins communicating with local authorities about five months ahead of the event. This includes working with the health department to get a waiver for all participants and working with the parks and recreation departments to get permission for participants who desire to set up stands in public parks.

First National Bank Texas promotes the event through the local school districts and does media promotion and advertising. Most of the registrations take place at bank-sponsored booths set up during community events prior to Lemonade Day, which this year was held on Sunday, May 6. Community adults are encouraged to patronize the lemonade stands on the designated day.

The children are tree to pick the site of their stand. Many set up in front of their own houses, but some ask permission to set up at the entrances of hardware and grocery chain stores. The youngsters show creativity in designing their stands. This year, two girls used an environmental theme and decorated their stand with recycled soft drink bottles. Another girl set up a fundraising "barometer" showing her how much money she hoped to gain for her designated charity and how much of the goal she had achieved up to that point. One high school student created a Facebook page to promote her business.

The children also showed enterprise with respect to pricing and merchandising. One boy sold lemonade in disposable cups for $1. However, if you paid $2, you could drink from a mason jar and then take the jar home. "We are in awe of the creativity and generosity of our young entrepreneurs year after year" Stephens observes.

A series of contests are held in conjunction with the event. Prior to the day of the event, participants are encouraged to bring samples of their product for a "best tasting lemonade" contest, which is judged by high-profile VIPs, such as the mayor of Killeen and a colonel from lst Cavalry Division of Fort Hood. After Lemonade Day, photos of the stands are evaluated as part of a "best stand" contest. Following the event, the young entrepreneurs are encouraged to submit a "business results" form which is then judged in a "most successful business" contest.

Successful stands have been known to generate $300 in revenue from a day's business. Although the event is intended to last only a day, the bank has heard of children who continue for the summer.

The event produced positive publicity for the bank at a time when the industry as a whole has been criticized. The bank sees a benefit in the program through investing in the future of the Greater Killeen/Fort Hood community. "Lemonade Day leverages a simple, small-business concept and creates a learning experience for children that can become the catalyst for a lifetime of success through financial literacy and entrepreneurialism" notes Robert W.Hoxworth, the bank's president. Stephens says she was astonished at the degree of appreciation expressed by both participants and their parents. "The thank-you notes from children and praise from parents expressing their gratitude for the opportunity is priceless."

Financial Literacy: It's Valuable for Adults as Well as Children

Dorothy A. Savarese

President and CEO

Cape Cod Five Cents Savings Bank

Orleans, Mass.

Asset size: $2 billion

The bank takes financial literacy seriously. So serious, in fact, that the bank employs a full-time education officer as part of the training department to manage financial training programs for people of all ages--not just children.

[ILLUSTRATION OMITTED]

Cape Cod Five actively reaches out to the community with its efforts. In the last two years, for example, it trained 266 senior citizens or other adults in eight class sessions. Also, the bank reached 1,185 students through 46 bank volunteers who served as instructors in 53 classes as part of the ABA Teach Children to Save program.

Founded in 1855, the bank has 20 offices throughout Cape Cod as well as the nearby islands of Martha's Vinevard and Nantucket. The institution has a long history of educating customers about finance, according to Savarese. In the past, these programs were mostly informal. Some of the bank's senior-citizen customers remember the days when bank employees visited elementary schools and showed the students what a savings passbook looked like. "Now our programs are much more ambitious and extensive," says Savarese.

With the recession in 2008, the bank reviewed its formal financial literacy programs for schools and concluded that it was reaching only a fraction of the student body. In light of the perceived need for more widespread financial literacy, the bank created a position for a financial education officer. The officer, who is also a certified teacher, oversees all the bank's educational initiatives from kindergarten through grade 12. The bank's two major programs for these age groups are Credit for Life and ABA's Teach Children to Save.

ABA's leach Children to Save program is an annual event (this year it was held April 24) in which volunteers from par ticipating banks visit local schools and give lessons for kids ages five to 18 on the value of saving. Savarese says that the banks employees enjoy this opportunity to go into the schools and speak to children about such financial matters as "needs versus wants" as well as the importance of saving for a goal.

The Credit for Life program is presented in the form of a "fair," centered on a 5-hour student role-play exercise in which students play the part of adults with career, salary and credit score. Each student is assigned a checking and savings account balance, a student loan repayment, a credit card payment and a job and salary that are in line with their stated ambition. Based on their salary, the students make financial decisions, such as renting an apartment independently or having a roommate; buying or leasing a vehicle and determining whether it is new or used, small or large, a sedan or a truck, or sportier and more costly; purchasing furniture; and saving for their retirement. A fair booth is set up for each financial decision the student must make.

In addition, Cape Cod Five established a Senior Issues Committee to identify and address financial issues of concern to senior citizens since the bank is located in an unusually popular retirement area. One of the things that the bank was hearing from seniors at the time was that they were apprehensive about financial exploitation and identity theft. In response, the bank partnered with the Elder Services of Cape Cod and the Islands to conduct seminars of these subjects. As a result of the high level of interest shown in these programs, along with the expected "tsunami" of baby boomers retiring to this marketplace, the bank's financial education program has committed resources to further support the 65 and older age group. The bank published a guidebook on financial and legal information for seniors, and expanded the course offerings to cover additional subjects, such as Internet banking and estate matters.

The bank continues to round out its educational offerings by providing financial courses for adults of all ages. For example, the bank offers courses on budgeting, identity theft and understanding investing through the Nantucket Community School.

Savarese adds that the banks "strong focus on financial literacy training helps to forge a connection with its customers and communities while boosting the banks overall business success. Building a community of financially savvy citizens is good for everyone. It's good for the economy, and it's good for the sustainability of Cape Code and the Islands."

Successful stands have been known to generate $300 in revenue from a day's business.

One of the things that the bank was hearing from seniors at the time was that they were apprehensive about financial exploitation and identify theft.

RELATED ARTICLE: Winners of ABA Community Bank Awards

Last year, both First National Bank Texas of Killeen, Texas, and The Cape Cod Five Cents Savings Bank of Orleans, Mass., were recipients of ABA Community Bank Awards in the category of "financial literacy." The award program was renamed this year and will be known in the future as the ABA Community Commitment Awards. For more information, go to www.aba.com/AbouPages/CommunityCommitmentAwards.aspx

ABOUT THE AUTHOR

WALT ALBRO is the editor of ABA Bank Marketing magazine, Washington, D.C E-mail:[e-mail]