This sponsored post is by Bank of America in continuation of Wise Bread’s partnership.
Many children dream of becoming grownups. However, few people look forward to the financial reality of being independent. It is never too late to teach your children how to manage money and save responsibly.
Bank of America’s Head of Deposit Products Erin McCullen stated that “as parents, we have a responsibility to prepare our children for success.” Giving our children financial skills such as budgeting and saving are key to ensuring that they can thrive as adults.
Budgeting is an essential skill that can be learned over the course of your life. Young adults can learn how to budget. This will help them plan their spending, save money and set goals. It also helps with financial anxiety. A Bank of America survey found that 52% of Americans didn’t begin budgeting until their first job.
Your children may not have a steady income if they are younger. However, you can help them budget with allowances and gifts from family or friends. It’s easy to teach your kids how to track their money and divide it into spend-now or spend-later.
You’ll have to expand these categories later, when your children are creating an adult budget. These categories can then be compared to their monthly income. They should have more money coming into the house than they are spending. This can help you identify the must-have and want-to-have items, as well as highlight areas where you can cut back or find ways to save.
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Consistent, automatic savings contributions can help to create a positive mindset for your children as they age.
McCullen stated that it is never too late to open a savings bank account. Even if your children don’t have any financial obligations or bills, you can teach them to save some money from their allowances or gifts from friends and family. Children can learn how to save early on, even for small purchases, and develop a habit of saving over time.
Young adults should also consider programs like Keep the Change, which helps build savings automatically by rounding up debit card purchases to the nearest dollar amount and transferring the change from a checking account to a savings account.
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At the end of their last semester at school, young adults have many things on their minds. A checklist of tasks to complete before they start their job is one way that young adults can stay on track as they transition from student life to working life.
This can include setting up a budgeting and tracking system, opening a savings bank to start saving money from future paychecks or meeting with a financial advisor to discuss transitions and what’s next.
It is important to start teaching your children financial skills now so they can be financially prepared for the future. They can carry the healthy habits they create today to help them get there tomorrow.
Because credit building takes time, young adulthood is the best time to start credit building. Credit can be built early to help you make major purchases or life events. Credit also has an impact on your ability to buy a car, live comfortably, and other opportunities.
Your children can learn about how to build credit by teaching them the steps, such as planning their credit usage, not spending beyond their means, and paying their credit card bills in full and on time.
You can earn rewards for spending with your credit card. An option like the Bank of America Customized Cash Rewards card offers flexibility to earn rewards in the category of your choice and can help maximize rewards while building credit.
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Every stage of school, from preschool to college, is designed for kids to be successful in life. However, learning about finances can have a significant impact on children’s lives long-term.
These are the ways that children can learn money in childhood, as suggested by experts at Bank of America
Elementary School: Focus on the basics, such as saving small change and planning what you will spend it. You can teach your children the basics of math and help them create a spending plan. These lessons can be applied to toys and gifts that kids want. They should learn to save money until they are able to purchase the toys of their dreams.
Middle School: These early math lessons about spending can be extended to include real-life decision-making and budget creation. This includes what should be considered and accounted for before you make a purchase. Highlight the thinking process behind spending before children go to the mall with friends.
High School: It’s important to learn the basics of credit scores, credit card usage, investing, saving for retirement, homeownership, and other financial topics as you approach adulthood. Students in high school should be educated about student loans. College debt is a common reality. Understanding the facts can help students make better decisions.
Bonus tip: High school students who have jobs (even part-time) can discuss taxes and how they manage consistent income. This can help them create balanced, accurate budgets for the future.
To help you achieve your goals later in life such as buying a house, build credit by opening credit card accounts. College is a great time to learn about investing, 401(k), and emergency funds.
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