Introducing children to the basics of banking and budgeting at an early age can prepare them for the future.
Looking after your finances is a crucial life skill, so it’s a good idea for parents to introduce their children to the basics at an early age. If you can help your child develop good financial decision-making early on, the better prepared they will be for financial challenges later in life.
Here are five ways parents can help their children financially prepare for the future:
Talk openly and honestly about finances
Some teens may be reluctant to talk about money, but parents can win their trust by providing useful advice and being good financial role models. Teenagers can feel pressured to spend at the same level as their peers without understanding that some are in more privileged positions than others. A dollar’s worth varies for every person.
Get them used to a budget
As with adults, young people need to be honest with themselves when making a budget and stick to it. There are apps that might give budgeting more appeal to technology-savvy kids, but there is real value in writing down a budget. Even a child with a small budget can develop a budget to understand how much to save to achieve a goal.
Download our budget worksheet for kids to introduce them to the concept of budgeting.
Introduce the importance of credit scores
While a credit score doesn’t begin until age 18, parents can highlight ways a score can be made better or worse, and why it matters.
A great way to start building credit is to set up pre-authorized payments to cover monthly bills — such as a cell phone — in full and on time. This is why learning to budget in the early teenage years is important: as you take on more bills, the opportunity to miss payments and fall behind becomes more likely. Credit, like trust, is slow to build and quick to lose.
Help them sign up for a bank account
Financial education is a lifelong process that begins in earnest with a young person’s initial bank account. At Access Credit Union, we have accounts specifically tailored for youth.
For example, the Grow Chequing account can carry teenagers through to age 19 with the option to transition to a student account if pursuing post-secondary education. The Grow Savings account is a great starting point for saving money as it has no monthly fee, and a higher rate of interest on the first $2,000 deposited, but also has the flexibility of unlimited free withdrawals.
Suggest getting advice on their financial journey
As teenagers approach adulthood, the financial learning curve gets steeper as they apply for their first credit card, arrange a student loan or buy a vehicle. It can be a confusing and challenging time, and young people should view their financial institution as a resource to help them.
Are you ready to open a bank account for your child? Visit your local branch today!