How to Help Your Teen Avoid the Financial Fears Millennials and GenXers Have
A recent survey from Capital One found that Generation Z, the cohort born between 1997 and 2012, also called digital natives, have similar fears as Millennials and GenX when it comes to managing their money.
That is, 79% of members of Gen Z say they were taught more about financial literacy in school, and only 15% said they are “very confident” about the way they handle their money. On the other hand, 41% are somewhat confident, according to the Capital One survey.
In a separate survey from CreditKarma.com, 63% of adults spanning all age groups said that personal finance should be taught in schools. In the absence of such education, members of GenZ and younger must rely on parents or other family members to teach them about managing money. The Capital One survey discovered that 83% of GenZ respondents learned about finance from a parent or a family member living with them.
The pandemic has also shaded GenZ’s views on money management, the survey showed, with 47% saying it caused them to change the way they manage money, and 39% saying they are “anxious about their money because of the pandemic.”
While the older members of GenZ are graduating college and entering the workforce, the youngest are still in elementary or middle school, which is the perfect time to begin giving kids some financial responsibility, experts say.
“While there’s no one-size-fits-all approach to achieving financial well-being, it is important to start early,” said a Capital One spokesperson in an interview with GoBankingRates.
One way to do so is to give teens or tweens their own debit card linked to a bank account and start showing them how to manage the funds in their account on a daily basis.
Bank Accounts and Debit Cards for Teens and Tweens
Members of Generation X and older may remember parents providing us with a passbook savings account where we could watch our money grow through compound interest. But today’s tech-savvy teens and tweens are used to using apps to do everything — from making plans with their friends to getting homework help. A debit card and app are convenient ways to start getting them comfortable managing money.
“This generation is composed of native technology consumers. Equipping kids with the latest tech tools is the best way to teach them how to earn and save money,” said the Capital One spokesperson. “Through MONEY Teen Checking, the mobile experience allows kids to practice planning for the future through a tool they are already familiar with – their mobile device.”
The Capital One MONEY teen checking account is a fee-free bank account that offers a debit card and an easy-to-use mobile app. It gives parents the ability to lock and unlock the card while allowing teens to see what they’re saving and spending whenever they login to the app.
The account can link to any external bank account — not just Capital One products — and allow parents to transfer funds to their children ages 8 and up at any time. Kids can mark money as “spendable” or “set aside,” so they know exactly how much they can spend at a glance.
Parents can also transfer money to reward their kids for meeting savings goals.
Debit Cards Help Kids Learn by Doing
The best way to start feeling comfortable managing money is by giving them the freedom to do so. A debit card designed specifically for teens and tweens can help you raise money-wise kids and teach long-lasting skills, the spokesperson said.
Money that goes into the account may come from an allowance, a part-time job for older teens, or cash and checks received as gifts for holidays and birthdays. Using the app, the spokesperson said, “Is a great way to turn an allowance into a money management tool.”
When purchase conversations shift from “Can I have?” to “Should I get?” it empowers teens to make better decisions for their future.
“As kids discover and learn about money decisions, they build the confidence and experience they need for a bright financial future,” concluded the Capital One spokesperson.
More From GOBankingRates