Let’s face it- being smart with money is a skill that can take a lifetime to build. That’s why banking for kids is so important. Managing finances and banking is hard, so it’s no wonder that only 29% of American adults consider themselves financially sound. Perhaps, if kids started learning about the real value of money from a young age, they’d feel more financially secure as adults.
So how does banking for kids teach our children financial skills to set them up for a stable future? Banking for kids doesn’t have to be complicated and you don’t have to graduate with a degree in finance to start teaching them new habits that will help their financial future. Use these 3 simple steps to get started!
Set Up A Kids Savings Account
Although every generation surely wants security and prosperity for the next, the share of young adults considered to be financially independent of their parents has decreased 8% since 1980. In today’s rapidly changing economy, assuming your kids will live by your example isn’t enough to ensure financial wellness– you have to actively give them financial responsibility. Additionally, since young children don’t have the burden of monthly bills, this financial responsibility can start with saving.
Many banks and credit institutions offer banking for kids, usually in the form of a savings account. These accounts allow kids to get comfortable with money from a young age, and teach them the benefits of savings. So before that birthday money burns a hole in their pocket, discuss the long-term benefits of saving money, such as saving for something really nice that they really want.
Also, take the opportunity to teach them that saving can prepare for situations that may come up where they will need the money, such as vacation. This practice will help them understand that saving money can prepare them for emergencies, like broken cars and HVACs, later in life.
Savings accounts for children under 18 have joint access for parents and allow both kids and parents to monitor balances. Before you set up the account, shop around for the best interest rates and look for features like financial education. Some banks even offer savings tracking goals that let kids see how close they are to reaching a certain financial goal.
Read More: 5 Priceless Tips For Teaching Kids About Money
Bring Your Kids To The Bank
While technology has certainly made it convenient to bank from home, banking for kids should begin at the bank. A poll found that a fifth of respondents reported feeling physically ill when handling financial matters and therefore avoided it altogether. With our kids spending less time face to face with other people, the behind-the-scenes process of banking becomes invisible.
Your child should feel comfortable and confident in the bank, a place that can often feel intimidating. Researcher Jennifer Urbano Blackford, who studies anxiety in children, says that “Individuals who familiarize more slowly may find encounters with new people overwhelming and thus avoid new social experiences”.
Introduce your kids to the banking manager, and let them be involved in the process of opening their accounts. That way, when they become an adult, the bank will feel like a familiar place instead of a place they want to avoid. This is a great time to introduce banking terms and show them what those terms mean. For example, what happens to all the coins that they may save? Grab some coin wrappers and get to saving. They are sure to love the money counting machine, ATM, and drive-thru tube system. Who knew the bank could be an exciting field trip?
Read More: The Importance Of Teaching Girls Money Confidence
Budget Their Weekly Allowance
A weekly allowance can be a subject of controversy, and some parents don’t like the idea of “paying” their kids to do chores. But banking for kids is impossible without some form of cash flow. An allowance lets kids who aren’t old enough to work learn how to manage their own money.
If they are in search of other sources of income, think about a neighbor that needs tasks completed such as pet walking or sitting, maintaining a lawn, or washing their car. A good old fashion lemonade stand can bring in some dough as well. Of course, oversight by a parent is of utmost importance, but allowing them to independently complete the task and accept the payment will help instill the concept of earning money.
Sit down with them and have them write down everything “extra” they want per week. Maybe it’s a subscription to a premium app on their phone or a new video game to add to their collection. If your child understands the cost of these things broken down per week, they are more likely to understand just how hard it is to earn money and how fast money can be spent. Use a checkbook register to help them track what they have saved and what has been spent. The math lesson of addition and subtraction alone will benefit them.
Read More: Kid Entrepreneur: 7 Practical Reasons To Encourage Your Kid To Be One
Banking for kids is simple; don’t overcomplicate it. The goal is to instill good financial habits and teach basic financial literacy. Talk to your kids about the value of being smart with money and put some responsibility in their hands. Head over to the bank today with your little one, and set them on a path for a financially secure future with banking for kids.
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They need to make money before they can save it. Ask yourself: Should You Allow Allowance?
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Photo Credits: Unsplash.com, Pixabay.com
Sources: Forbes, Forbes Advisor, The Guardian, APA, CNN, Pew Research