Partner Spotlight: Independent Bank

Partner Spotlight: Independent Bank

Raising Financially Empowered Kids

5 Tips you need to know

Do you consider yourself to be financially empowered? When you make financial decisions and plan your financial future, do you do so with confidence? It’s very comforting and reassuring to feel confident and empowered when it comes to finances, so of course, that’s a quality you want to pass on to your children. But just how do you go about raising financially empowered kids? Here are a few tips.

Talk about money at home.

The number one way to raise financially empowered kids is to talk about money at home. Don’t make this a taboo topic; make it something you and your partner discuss openly around the kids, and make sure they know it’s okay for them to talk about money, too.

When you’re facing a big financial decision, share age-appropriate details with your kids. Let them know what factors you’re considering in making this decision, and explain how the decision will impact your life.

Fostering a sense of openness around money will establish, early on, that money is not something to fear. It will also help ensure that your kids feel comfortable coming to you with questions about money, which will help them learn more about money and spending as they grow up. Financial empowerment and financial knowledge are closely linked, so the more your kids learn, the more empowered they’ll be.

Be transparent with the family finances.

Sometimes, when kids enter college and start taking control of their finances, they experience a sort of sticker shock when they suddenly realize how much things cost. This sticker shock can shake their confidence with money.

If you are transparent about the family finances all along, then your kids are less likely to experience this shock. Let them know how much your mortgage payments are, what you spend on groceries each week, and so forth. An easy way to do this is to have family budget meetings once a month. Together, you can review how much the family spent on various items the past month, and also plan what you’ll spend the next month.

When your child is about 10, you may want to start creating a budget with your child. At first, it might be really simple, but as they enter their teen years and get a job, start saving for a car, and start paying their own phone bill, budgeting can become a more intensive exercise that you guide them through.

Start out by letting them see your budget, and showing them how you record the money you earn each month, and then how you plan for the various expenses you have throughout the month. Explain different spending categories, and how much money you allot for each category. Go over your savings goals, too, for both long- and short-term savings. Explain that they may want to save now for a toy, but also start setting funds aside for a vacation you have planned for next summer. This will give your child a true grasp of how much things cost in the “real world,” as well as the importance of starting to save now and for things in the future.

Give them an allowance.

A great way to teach financial empowerment is to let kids practice spending and budgeting when the stakes are still low and when they’re still only working with small sums of money. To do this, you’ll need to give your kids an allowance.

Teach them that every coin has value. These days, you may do a lot of online and virtual banking. But it is still important for your kids to learn the value of each coin and dollar. Give them their allowance in cash, and guide them through spending that cash at the store. Help them count out the necessary coins and dollars to buy the items they want. When they are given change, help them count that change, and explain why they received back a certain amount.

It’s also important to introduce your kids to the digital world of banking. Log into your online banking account or hop on your mobile banking app, and show them all the banking features, and how easy it is to stay on top of their balance and transactions on the go. Show them how they can set up banking alerts, transfer money, or pay a bill digitally, because let’s face it, your kids will most likely not be visiting a branch too often.

Teach them money is earned.

You want your children to understand that money does not grow on trees; it has to be earned. Of course, you can teach your child this lesson just by being open with them about the fact that you work, and in exchange for your work, you get money. Let them watch you spend cash at the store, and mention that you were given that cash by your boss because you went to work.

Rather than just handing your kids’ allowance money each week, talk with them about how they plan to spend it. Depending on the child, you may want to set some hard-and-fast rules in this regard, or you may just want to give them some suggestions. Teach them to spend, save, and donate a certain percentage of their allowance each week, just as they would an actual income.

When your child does start working, these spending, saving, and donating habits will already be engrained. It’s a lot easier to feel financially empowered when you’re in the habit of saving.

Let them make mistakes.

As your child manages their allowance, don’t be afraid to let them make mistakes. Do they want to blow all of their money on a pair of jeans rather than saving part of it? You can explain why they may not want to do it, but ultimately, leave the decision up to them. Mistakes made at this stage are little nudges and tools for learning. If you don’t let them make mistakes until they’re older, those mistakes will be a bigger blow to their confidence.

Raising financially empowered kids is a great way to set them up for a lifetime of success. Follow the tips above, and above all else, remember to be open about money. It’s not the taboo topic it was in the past, and that’s a great thing for this next generation.

Thank you to Independent bank for supplying this helpful and informative blog post on teaching financial literary to children. Independent Bank is one of many local businesses and organizations that partner with Cascade Community Foundation to impact the Ada, Forest Hills, and Cascade communities. The Foundation’s Annual Partner Levels are available to businesses and families. Annual Partner levels are available to individuals or families who have the option to be acknowledged at events, on social media, and on our website, be featured in an e-newsletter, and many more benefits. For more information on how to become an Annual Partner, contact Kelsey Amick at Kelsey.amick@cascadecommunityfoundation.com.