10 Steps to Turn Your Kids into Financially Responsible Adults
It’s never too soon to start teaching your children how to be financially responsible. Knowledge is power, and kids who learn about money and how it works early on will be more successful down the line.
Unfortunately, many parents forget to instill these very important skills in their kids at all. According to a survey from the JumpStart Coalition for Financial Literacy, only 26% of 13-21 year olds said that their parents taught them how to manage money. As such, young adults are entering the workforce with no sound notions about the importance of saving, budgeting, and spending responsibly—not to mention more abstract concepts like compounding interest and managing debt.
Avoid these pitfalls and give your offspring a financial edge by starting them off early with these 10 simple tips.
Lead by example. Show your kids early on the importance of earning, saving and spending wisely. You don’t need to go deep into detail about your family’s financial specifics, but it’s important to instill the basics of personal fiscal responsibility from a young age with simple examples: “Because Mom works at the office during the week to earn money, we can afford a family trip to Frontier City on Saturday!”
Make it fun. Get your kids used to the idea of cash transactions and the basics of buying and selling in a fun way with classic family board games like Monopoly and Life. You can also teach them more specific financial lessons with online games like PBS Kids’ Mad Money and Doughmain’s Sand Dollar City.
Set up a bank account. Once your child reaches the age of 12, it’s prime time to set up a personal bank account for them. Choose an account that requires no minimum balance, and start small with a $30 deposit. Quail Creek Bank’s free LINQ account allows anyone under 30 to earn an automatic $30 match straight away. How’s that for motivation?
Pay a weekly allowance. Kids respond well to structured rewards systems, so why not encourage them to help out with chores around the house in exchange for a weekly allowance, at the amount of your choosing. Just $10 a week is a good place to start, with the opportunity to earn more from additional responsibilities. With Quail Creek Bank’s unique EZ Allowance program, parents can set up an automatic weekly deposit from their account (with any bank) into their child’s account, and earn their kids an extra $30 just for doing so!
Teach the power of investing. The concept of compounding interest can be an exciting one for kids to learn. Start with one simple question: “What would you rather have? A million dollars right now or a penny doubled every day for 30 days?” Most kids will probably say a million dollars now…until you show them that the latter option actually adds up to over five million dollars! Let them play around with online interest calculators and then make it real by showing them what’s happening in their own bank accounts as interest accrues.
Customize the experience. What’s the only thing more exciting than getting your own debit card? Getting your own debit card with a picture of you on it! With QCB’s LINQ account, your child can customize their card with his or her own personal image, whether it’s a perfectly timed action shot from a winning soccer game, a group picture with friends, or a perfectly filtered Instagram of Spike the family dog. Just be sure to explain the importance of careful spending, because with that cool card comes great responsibility.
Get tech savvy. Kids today are used to being surrounded by technology, and are often far savvier than their parents. Embrace the now by exposing your children to online and mobile banking, which will probably make a whole lot more sense to them than the paper statements and deposit slips of yesteryear. Quail Creek Bank’s nifty new QCB app allows you and your brood to cover all the banking bases through one easy-to-use platform. Aggregate your accounts, view your balance at a glance, and use Apple Pay from your smartphone or smartwatch.
Keep track of transactions. Monitoring where money goes is a crucial aspect of financial management that kids should learn right away. With the QCB app, you can teach your children to tag and categorize their transactions so they can then start budgeting for various necessities and fun extras. They can also upload images to their transactions (like a receipt or a picture of the item purchased), which can be extra helpful for visual learners.
Meet your banker. Despite all the technology available today, it’s important to personalize the banking experience as much as possible for your children. Small but well-equipped community banks like Quail Creek have the ability to treat their customers like people, not just accounts. Their location in Oklahoma City is a great place to take your kids so they can put faces to abstract concepts, ask questions, and learn about the importance of quality customer service and giving back to the community.
Watch the money grow. Once you have all the tools in place, be sure to check in regularly with your child to see how their account balance is progressing. Help them set goals for major purchases, and encourage them to save as much as possible and therefore accrue the maximum amount of interest. If you start them young, they should have a comfortable little nest egg in place by the time they graduate high school—and that’s something the whole family can feel good about.