4 Things Parents can do to Prepare Kids for Financial Success
By Gigi Dixon
When was the last time you thought about money? Chances are, it was probably today, since most adults deal with money — in one way or another — on a daily basis. We pay bills and buy groceries. We consider money when weighing job opportunities, when determining where we’ll live, and when, or for some, if, we might be able to retire. We are faced with financial decisions constantly. And yet, the vital skills of money management, budgeting, and saving are often missing from the curriculums at our children’s schools. It’s one of the reasons why National Financial Literacy Month, observed each April, and the American Bankers Association’s Teach Children to Save Day on April 29, are so important.
Few states require financial education courses for high school students, which often leaves our young people woefully unprepared when it comes to understanding finances. When 2,459 students aged 15-18 participated in a test of financial literacy standards last year, more than half scored at or below 69.9%, the equivalent of a D+. And yet, a Harris Poll Financial Literacy Survey found that of families who have had discussions with their kids about money, more than half of those discussions were initiated by the kids. This tells us two things: Our kids need to know more about money, and thankfully, our kids actually want to learn more about money.
So what should you be doing to help prepare your kids for a successful, healthy, lifelong relationship with money? Here are four things you can begin to talk with them about now.
1. Help your child establish a savings account. The sooner your child makes saving a habit, the better, and the more likely it will become a habit that lasts into adulthood.
2. Help your child to create a budget. Budgeting is one of the key components for financial success. Whether you’re helping a 10-year-old create a budget for his $10 allowance or a 17-year-old create a budget for the weekly paycheck from her part-time job, if your child understands — and lives by — the concept of budgeting, it’s a significant step in preparing him or her for the larger budgets they will need to manage later in life.
3. Help your child understand the difference between needs and wants. It’s ok for your child to spend money on those things that are “wants.” The idea is for them to be aware of the balance between the two, so that spending on the “wants” isn’t excessive. This lesson can be particularly important to help your child understand, since it is one that many adults often struggle with as well!
4. Help your child to set financial goals. Whether it’s having enough money to buy a new gadget, the latest pair of sneakers, or even a car, helping your child establish a plan to reach that goal — and celebrating the moment they achieve it — can be one of the greatest financial teachers.
On Friday, April 29, volunteers from Wells Fargo and other banks across the country will be visiting classrooms and working with young people as a part of Teach Children to Save Day. It’s an important first step towards encouraging financial education, and Financial Literacy Month is the perfect time for parents to continue the conversation at home. Look for books on the topic of kids and money, or talk to your local banker for suggestions.
You can also check out Wells Fargo’s fun, interactive and free Hands on Banking program. The online curriculum is easy to use and lessons are specifically tailored by age-group. (There are lessons for adults as well.) The Wells Fargo children’s financial success resource center also offers important information, as well as access to products and services that can support your financial goals.
These are just a few of the ways you can get started. Whichever methods you choose, start now. Your child’s financial future is at stake. Getting them on the road to financial success now can increase the likelihood that the ride has as few bumps as possible.
For more information and resources download Wells Fargo’s Teach A Child To Save Toolkit