In the last few decades, we have witnessed a major disruption with the introduction of technology. One of the biggest changes we have seen is in the way we do banking and finances. Banking has become easier and quicker. However, individuals and families continuously have to adapt to these new changes in order to stay on top of their personal finances or risk being left behind.
Are our children and young people ready for the finance technological world? How do we teach them the basic foundational principles of finance before launching them into the finance technological age?
Neala Okuromade, a personal finance author, tackles two questions with helpful guidelines on how you can support your child’s monetary future.
Encouraging your child to open a bank account
A great way to start implementing financial principles to your children is opening their own personal bank account. Parents could encourage their children as young as age 7 to register for an account.
The Financial Times stated in an article, “the youth banking market is huge — and it’s no longer just about saving up for a rainy day. There are 2.8m accounts held by those under the age of 18, and 750,000 new accounts are opened each year, according to figures from the Nationwide Building Society”.
Discuss with your child about what the bank account is for and why they would need it now and in the future. It is a good time to let them know that you yourself have one and that it is a common requirement in today’s society.
Visiting the bank with your children
When visiting the bank encourage your children to ask the bank representatives questions about their bank account. Not only is it an exciting experience for a child to visit the bank but they will also grow in confidence by having the opportunity to speak to the bank staff.
Choosing a child-friendly bank account with online banking access is a huge advantage. With parental supervision, having this online access facilitates parents in training their children for when they become solely responsible for their own accounts.
Demonstrating the basics of banking
Parents should have a set time on a monthly basis to go over their children’s bank statements either online or physically. Whether parents give them £1 or £10 a month in cash or bank transfers, your child will see this banking activity for the month and will learn how to recognise and account for this.
Discuss with your child how a bank statement works, for example
- What is their income?
- How they have spent their money i.e. their expenses
- The debits and credits columns
- Finally the balance on their account
Teach your kids how to save
Encourage children to save a portion of cash given to them by means of gifts, allowances etc. until they can deposit it into their bank account personally. When they check their online banking or monthly statement they will feel proud to see their pocket money grow. This will help to develop the habit of saving from very early on in life, something even we adults may sometimes find hard to do.
Find fun ways of getting your child to file their statements neatly each month to establish the importance of being organised. This exercise should even challenge us adults to form similar habits with our own money, thereby helping us get on top of our own finances.
Talking ‘money’ with your children
Discussing money with children should not be scary! By having a constant dialogue about pocket money, saving, giving and spending, allows children to talk openly about money. Establish the reasons why a household may use money e.g. to buy gas, electricity, food, rent if something breaks etc. This brings a certain awareness of responsibility and understanding as they move steadily into the real world.
Becoming comfortable with money and the technological changes
From a young age, you want to impart financial principles to them so they feel prepared. Although it is a slow and long process, children should feel comfortable speaking about money and the technological changes before they face the harsh reality of finances in the coming years.
Personal finances can be somewhat overwhelming but parents should reflect on the benefits of teaching their children to become aware and the advantages it will bring to their future. These are foundational principles parents should be applying. The What’s Your Financial Gameplan Bundle includes an essential book and workbook combination to help you as a family, get started on your money plan! Visit www.whatsyoufinancialgameplan.com to buy the bundle now! (It is FREE delivery for customers in the UK)