For children, a strong foundation in personal finance can lay the groundwork for a lifetime of smart money management. That’s why parents place such great importance on financial literacy at a young age.
A recent MyBankTracker survey found that an overwhelming majority of parents (82.2%) taught or plan to teach their children about money and personal finance before the age of 18 while most parents (83.8%) want a personal finance class taught in school.
But, according to the Council for Economic Education, only 21 states require high school students to take a personal finance course, as of February 2020.
So, parents may take matters into their own hands and begin teaching their children about money and how to handle it wisely.
- 82.2% of respondents will or did teach their child about money and personal finance before they are adults (18 years old)
- More women (64.8%) than men (35.2%) taught or plan to teach personal finance at a younger age (age 5-10)
- 83.8% of respondents wish the child’s school taught a class on financial literacy
When did you or will you teach your children about financial literacy, money, and personal finance?
|Age range||% of respondents|
|I did not or don’t plan to teach it||17.7%|
Do you want a financial literacy class taught in your child’s school?
|Response||% of respondents|
How Children Can Start Managing Their Own Money
Setting up a bank account for a child is usually the first step to help him or her manage personal finances.
Here are the most common ways to do it:
Kids savings accounts
Akids savings accountis designed to be a place where children can begin to put any savings that they may have at an early age.
Typically, it’s just a regular savings account with a joint accountholder who must be an adult. The account may require that certain transactions, such as withdrawals and outgoing transfers, be initiated by the adult accountholder.
Teen checking accounts
Like with a kids savings account, ateen checking account(may also be called “high school student checking”) usually requires a joint accountholder who is age 18 or older.
Because checking accounts serve as financial hubs for most people, it is vital in allowing children to manage their own money.
Depending on the bank, there may be restrictions on the transactions and services offered. For example, a teen checking account may not offer paper checks and/or prevent the ability to overdraw the account.
Prepaid debit cards
Prepaid debit cardsare also popular for money management at a young age.
At the core, these cards operate similarly to teen checking accounts. The biggest difference often lies in the features that are marketed specifically for parents and their children.
These prepaid debit cards may allow multiple debit cards for multiple children on a single account. Additionally, useful features may be offered, such as financial tasks, savings goals, and weekly allowance distributions — making it easier for parents to play a bigger role in building their children’s money habits.
Authorized users on credit cards
Parents who want to help their children establish a good credit history can add children asauthorized users on their credit cards(fees may apply).
As an authorized user, a child’s credit report will reflect the activity on the credit card account. If the credit card account is paid on time with low balances, the child will begin to build good credit.
How Parents Can Help Develop Money Management Skills
There are various ways that parents can ensure that a child’s finances don’t get out of control, which may contribute to bad money habits.
Here are some of the best ways that parents can monitor a child’s financial accounts:
Many banks and financial institutions allow parents to place limits on transactions, such as purchases and withdrawals, so that children do not overspend or take out too much money.
Create account alerts that will send out notifications when a specific type of transaction occurs on an account.
For example, every debit card transaction can trigger an alert that allows parents to see how kids spend their money.
Online and mobile banking
Depending on the bank, there could be plenty of online and mobile banking features that are essential for keeping track of a kid’s financial accounts.
For example, parents can get a better idea of how a child is spending his or her allowance.
The study was conducted through Google Surveys on behalf of MyBankTracker from August 11, 2020 to August 17, 2020 with respondents who are parents in the United States:
- Question 1 had 469 respondents with a margin of error of +/- 4.8%
- Question 2 had 446 respondents with a margin of error of +/- 4.7%