Has your relationship with money changed? In today’s paperless world, virtual currency is becoming more convenient (and secure) than paper. Monitoring your transactions and establishing a budget are paramount to proper money management. This shift also affects the way we teach our youth about managing money.
Think back to when you learned about money as a child. Did you have physical bills and coins? Most likely, yes. Your weekly allowance (if you received one) would be paid in the form of cash. If you wanted to purchase something special, you’d check your wallet (or piggy bank). When that money was low, you could see how much you had left.
But today, many parents find it more convenient to transfer money into their child’s savings account. Even when your children watch you pay for goods or services, they likely don’t see cash exchange hands. How do you prepare your children to manage money in a world with virtual cash?
Start with the basics.
While it may seem more time consuming to withdraw cash and use that for certain transactions, or to pay a child’s allowance, the visual aspect of learning is important. Adding to a jar of money and then taking money away for purchases is a good first lesson in how money management works, especially for younger children.
Open a joint account.
Once you’ve set the foundation, take the next step. Open a joint account and deposit a specific amount of money into the account. Establish good practices like monitoring your account online. Teach them about deposits and withdrawals and show them how that impacts the overall balance.
Educate. Educate. Educate.
How often do you just go through the motions of paying for your groceries, gas, etc., without much thought behind it? Take a moment to talk about how you budget for your weekly, monthly, occasional, and unexpected expenses. Practice adding up purchases before making the transaction. Talk to them about comparison shopping for larger purchases. Discuss money coming in versus going out, and how money is a limited resource that should be managed with planning.
When teachable moments arise, take the time to share with them how much it costs to pay for things they use or do, like when you’re going to the movies, a sporting activity or birthday party. Help them make a basic plan for their money as they start to earn some for themselves. A budget doesn’t have to be elaborate. Start with setting aside some for saving and some for spending.
Take advantage of educational opportunities outside of the home as well. Vantage offers many free financial education opportunities. At an early age, we teach the importance of saving money with our Secret Savers Club and Money Matters program. We offer programs for high school and college students, as well as adults. We also have a checking account option for those transitioning from dependent to independent. Our free Save.Think.Live. account is designed for members age 13 – 25.
Give them a debit card…and help them to use it responsibly.
The next step is a big one. Allow them to use a debit card to pay for purchases. Show them how to monitor the balance online. In a world of cyber security threats, it’s also important to explain how to keep their card and account information secure. Remember, your example is the one they will likely follow. Make it count!
Is your child a Secret Saver? If not, join the club today!
Ready to take the next step?
Already have a Vantage checking account?