By Jerry Quinn, head of Wells Fargo Military & Veterans Programs
When was the last time you thought about money? Chances are it was today, since most adults deal with money 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 will 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.
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 the Financial Educators Council’s test of financial literacy standards last year, more than half scored at or below 69.9 percent.
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 are interested.
So what should you be doing to help prepare your children for a successful, healthy, lifelong relationship with money? Here are four things you can talk with them about now.
1. Help your child establish a savings account. The sooner your child makes saving a habit, 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 okay 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 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.
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 military servicemembers, as well.
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.
As a public service, Wells Fargo provides free and fun financial education programs without commercial content.