Laying the Foundation for Financial Success
Managing money today might be more difficult than ever before. With a plethora of banking options, investment apps, checking accounts, fintech innovations, and other financial products competing for your attention, it’s easy to get overwhelmed. That’s why teaching kids about money is an important life skill.
Even though financial literacy is becoming more complex, a checking account still remains the most common money management tool out there. Read on for ideas on how to hardwire sound financial habits in your kids and help them become money-savvy for life.
Teach Money Management Skills
Opening a checking account for kids is a great first step to introduce your kids to financial responsibility. Here’s why.
Starting Early Pays Off
If they’re already helping out with chores around the house, give them a weekly allowance in exchange for a job well done. Help them open a joint checking account, and deposit the money together. You can then transfer their allowance to their account and, together, monitor the balance to make them realize that hard work and consistency pay off.
Budget Like a Pro
The biggest lesson of financial literacy for kids may be the concept of a budget. If they’re still in elementary or middle school, you might nudge your kids toward buying their own toys, video games or movie tickets.
Teaching kids about money should be fun. Don’t feel like you need to turn every present or outing into a financial lesson. But regularly showing them their checking account balance and transaction history can help them better understand where their money is going. Some banking apps even have features that track data on how much money is coming in and out of a kid's checking account and what that money is spent on.
Depending on your kid’s age and learning style, you can also explain how to allocate a portion of their account to wants (a video game), needs (a new backpack for next year), and long-term savings (a college fund or a Roth IRA). Again, keep the stakes low. The goal here is to develop the ability to earn money and draw from their funds.
Save for Goals
Showing your kids how to save can reinforce a healthy reflex that can benefit them for the rest of their lives. But it also might seem overwhelming at first, so pick out a goal that you both want to accomplish and then save up for it together.
Maybe it could be a small trip. Or a bike or an early holiday gift. Decide on something your kid is excited to work toward. Then, create a realistic budget for how much it’ll cost. Match every dollar that your kid dedicates to this goal and reward this financial discipline with the trip, bike, or holiday gift to reinforce the benefits of planning, saving and delaying gratification.
Using ATMs and Online Banking
Make sure your kids know to never share their PIN with anyone but their parents and to protect it when they’re standing at an ATM. Let them know it’s best to use well-lit ATMs in safe areas, and that it’s okay to report strange activity (like someone watching them as they’re withdrawing or depositing money from their checking account).
Many of the same safeguards apply to online banking, as well. Remind your kids to never share their password or username with anyone but their parents, to open their apps only when no one is peeking over their shoulder (and, preferably, in a private space), and to log in when they’re connected to a network they trust.
Encourage Responsible Spending and Saving
When it comes to financial literacy for teens, saving is key. But spending responsibly is just as important. This is a good time to explain what interest is and how it can be a good or bad thing.
Making Smart Purchases
Opening a teen checking account and showing your kids how debit cards and investments work can guide them toward spending wisely as they get older. Show them how a high-yield savings account, like a certificate of deposit or a money market account, can accrue interest that compounds on its own. Then, explain the flipside of that process with credit cards, which will charge you more annualized interest the more you spend without repaying the balance.
Managing Multiple Income Streams
When your kids are ready, encourage them to get a side job like babysitting, mowing lawns, or working a few shifts at the neighborhood market. This experience should speed up their understanding of larger financial concepts.
Big Bank Muscle, Small Bank Hustle
You can deposit money with your kid at a low-pressure pace at a bank like First Horizon, which offers both large-scale capital resources and personalized service. We can even set your family up with a joint checking account and banking apps.
Understanding the Basics
FirstView, SmartView, and TotalView are the three checking accounts that First Horizon offers. Check out our comparison chart of all three accounts for a bird’s-eye view of which one might be best for you and your kids.
We also have a resource library so parents can deepen their own financial knowledge, including articles on all the things that adults should know about their finances (which you can pass on to your kids as you’re helping them set up a checking account).
Empowering Your Family’s Financial Future With First Horizon Bank
No one can deny the importance of financial literacy. When you open a First Horizon checking account for your kids, you can help model healthy financial decision-making that may last a lifetime. View our checking account options here – and reach out when you’re ready to get started.
