Financial literacy is an important part of being a successful adult. The best way to become financially literate is to get started early. If you have a child, you may want to take the following steps to help him or her understand how banking works – and how the underlying concepts will impact his or her future.
It should come as no surprise that children who have a hard time handling money also have parents with the same problem. Before you start talking to your children about finances, take some time to do a little research on your own. Make sure you know about your own financial situation and what your bank can offer you. If you look hard enough, you’re sure to find a few services that might surprise even you.
Start with the Basics
It’s really never too early to start with the basics of finance. If you want your child to learn about banks, it’s a good idea to introduce a few of the more common concepts early on. A piggy bank, for example, is one of the best tools for helping your child to understand how a savings account works. You don’t have to get into difficult concepts like interest or the various savings tools out there quite yet, but do start introducing your child to as many of the basic concepts of finance as you can so they build up a bit of financial literacy on their own.
Make the bank a topic of play in your house. Encourage your child to think about what might happen in a bank and allow it to be part of their routine. You can create your own Bank of Mom or Dad at home, helping your child to save money and even helping him or her to decide how best to ‘invest’ his or her allowance. This is a good way to help your child to become a bit more comfortable with the idea of going to the bank when he or she is older.
Open an Account
If you have a child in his or her early teens, it’s a good idea to take him or her to the bank to open a savings account. Many banks have accounts specifically set up for students that have no fees and require no minimum balance. You can then encourage your child to deposit money from chores or other sources into the account, making him or her responsible for keeping the account balanced and allowing your child a bit of financial freedom at the same time. Once he or she is older, you can also help your child to open a checking account and navigate the difficulties of owning a debit card.
Talk About the Future
Once you’ve got your child set up with the simpler products at a bank, it’s time to start talking about the future. Pick up a brochure that describes the bank’s products and have a talk with your child about how these instruments might impact their future. This is a great time to talk about interest-bearing accounts, student loans, and credit. Be honest about how this works and let your child in on how these tools impact your life at home.
Schedule a Meeting
Finally, take a moment to schedule a meeting with someone at the bank to give your child a more professional look at what’s going on. Most banks are happy to provide a bit of financial education to young people, especially if it helps them to secure a customer in the future. This is especially useful if there is an aspect of financial planning with which you are not personally familiar, as it will give you a chance to make sure your child is learning the correct information that is relevant to his or her future.
Make sure that your discussions of finance continue with your child as he or she gets older. Understanding how a bank works is important, but it’s only one piece of the puzzle. If you can provide your child with the right guidance, he or she will have a more financially sound future.