De La Cruz: The importance of financial literacy for Arizona’s foster youth

According to the 2024 TIAA Institute-GFLEC Personal Finance Index, financial literacy, or the ability to understand various financial skills and manage one’s finances, is low across all generations of Americans, but lowest with Gen Z-aged Americans.

On average, only 34% of Gen Z respondents answered questions that tested their understanding of personal finance management correctly when surveyed.

The gap in financial literacy is especially worrying when adding the lens of youth who experienced foster care, a vulnerable group who often lack meaningful connections, mentors or a solid support system.

Developing this vital skillset can help youth that experienced foster care more quickly achieve self-sufficiency. Conversely, not having sound financial skills often means detrimental situations with little to no safety nets in place.

Debt can negatively impact a youth’s ability to purchase a car, get access to housing or other basic services. Many young adults learn financial skills either through a parent or mentor, but these skills can be difficult to develop and practice for foster youth as they navigate the twists and turns of adulthood alone.

Financial literacy is a pillar to achieving independence and stability and can keep foster youth from slipping into cycles of poverty or even homelessness.

Each year, 900 youth leave Arizona’s foster care system without the meaningful connections they need to thrive, and as a result, are more likely to drop out of school, experience homelessness, become parents before they are ready or go to jail.

As an answer to averting these cycles of poverty, Arizona Friends of Foster Children Foundation operates a Keys to Success program for youth aged 16-26 (both currently in and aged out of the foster care system), helping them become self-sufficient.

Its pillars address everything from securing employment and avoiding homelessness through emergency funding to managing one’s finances, a facet known as Keys to Financial Success.

In 2023, AFFCF saw 111 youth complete the financial literacy course. 91% of these youth reported increased money management skills and demonstrated an increased adeptness for financial responsibility by starting or increasing earned income savings. As a result, they are more equipped to deal with life’s unexpected circumstances and more effectively continue on the path toward achieving self-sufficiency.

Keys to Financial Literacy offers youth a comprehensive education in financial management. It covers fundamental topics such as creating and adhering to a budget, building credit and recognizing the dangers of predatory lending practices, among other important subjects. The training begins with teaching the importance of setting both short and long-term goals, which are essential for helping the youth develop a personalized financial action plan.

Participants receive guidance and support in opening their own bank accounts, which is a critical step toward financial independence. Upon completing the training, participants become eligible for a savings match. This match is applied toward the purchase of a vehicle, which helps remove a major barrier to achieving independence and self-sufficiency.

Editor’s note: Luis De La Cruz is president and CEO of the Arizona Friends of Foster Children Foundation, a Phoenix-based nonprofit that empowers children and youth in foster care. He lives in Buckeye. Reader reactions, pro or con, are welcomed at AzOpinions@iniusa.org.