By Aaron Allen, The Seattle Medium
Brittney Elder, Corporate Responsibility Relationship Officer for JPMorgan Chase in Seattle, believes that summer breaks provide an excellent opportunity for parents to teach their children about being responsible with money.
According to Elder, summer jobs, babysitting gigs, or an allowance from parents can provide kids with the ability to earn money in order to pay for the things that they want, but they can also give parents a chance to sit down with their kids and talk to them about financial literacy, saving and the value of money and hard work.
“Kids start learning about money at an early age and this is a great moment to talk about financially healthy habits that can last them into adulthood like saving, budgeting and making the most of what they earn,” says Elder.
During an exclusive interview with The Seattle Medium, Elder offered several tips for parents that can help their children establish a solid foundation as they begin their own financial journey.
The first tip identified by Elder is to “Let Them Earn Their Own Money”. Experts agree that giving your child the freedom and opportunity to earn money is the first step to financial responsibility. Earning their own money gives them confidence in their abilities, strengthens their work ethic that can be applied to life, school and career. Elder says that this is an accomplishment that should be celebrated by the family.
“We should really be celebrating and focused on the fact that your child created and found an opportunity to earn money,” says Elder. “I think ultimately that is the foundation, the beginning of establishing healthy financial habits. It is the first pillar in how your child learns to earn money and what that looks like as your child begins understanding how to become financially responsible.”
Elder says the second step to teaching our children about the responsibilities of money is to discuss your child’s “wants” vs. “needs”. When you take a child, or even an adolescent, into a store and they get excited about all of the choices and options available to them throughout the store, especially when they have their own money to spend, it can be overwhelming. So, it is important that parents talk to them about the difference between what you want and what you need, especially when it comes to allocating, spending and eventually saving your earnings.
“Now that your child or children are making money what is the plan?” Elder asks. “In starting that conversation parents can begin helping their children understand the difference between what wants are and what needs are.”
“I think for a lot of kids, when they start their first summer job, they usually want to go out and start spending money, I know for me that when I started working in retail, all I wanted to do was buy clothes and makeup,” Elder recalls with a chuckle. “I was fortunate that my parents intervened and showed me the importance between wants and needs. So, in starting those conversations parents should have their children write a list of the things they desire but keep in mind the things that are a priority.”
After establishing the foundation of wants vs needs, Elder says that the next step is setting up savings goals. She says that setting such goals are vital to the financial literacy of our children because this will affect their future in more ways than one. Children should be asked the same questions for planning and execution that we ask ourselves as adults, like where you see yourself in a year, five years, and depending on their age, where do they see themselves ten years from now.
“I learned that if you set savings goals, it can leave you with this ambiguous space of what are you working towards?” Elder continued. “Say your child wants to save for their textbooks as college is around the corner, let’s put a dollar amount to that and make sure that they are creating measurable goals that will motivate them to save for the things that want but more importantly for the things that they need.”
Elder says that once your child has an understanding of money and how it can work for them, the next logical step may be to open your child’s first bank account. As it relates to options for your child’s first bank account, Chase First Banking is a great tool that parents can utilize to provide their kids with the joy of having a bank account and helps them develop good money habits.
“[Chase First Banking] allows young people to access their funds under the supervision of parents,” says Elder. “I think this is a really great product to introduce your children to the financial system, so that they can get familiar with the processes of banking including saving.”
The last aspect of teaching our children about financial literacy is to continue to talk about money with them.
“When we think about finances, we are thinking about the future for our young people,” Elder adds. “Managing finances is truly a tool for vision building and how we can make it fun and exciting for them to manage their finances. Mastering the fundamentals of financial management are very important in your child’s journey in financial literacy.”
Finances FYI is presented by JPMorgan Chase. JPMorgan Chase is making a $30 billion commitment over the next five years to address some of the largest drivers of the racial wealth divide.