By CFPB and FDIC
Parents tell us it’s important for children to be well-prepared to lead good financial lives. Yes, financial facts and information are important. But the way we behave around money is connected to the way we behave in the rest of our lives. That means it’s important for children to develop attitudes and characteristics as well as knowledge.
So, what kind of person is likely to have financial well-being—that is, to feel confident about their financial situation, today and down the road? It turns out that people who feel financial well-being have a few personality traits in common:
Focus on the future. People with this characteristic tend to plan ahead and think about how their actions today will affect them in the future.
Diligence. This trait describes people who are driven to finish what they start, work hard, and take care of details.
Self-control. People with self-control are generally able to show patience and wait for what they want.
Self-confidence. People with this trait tend to measure themselves against an inner yardstick, and believe their actions can make a difference in their own lives.
Parents, if you’re thinking about getting your children on the path to financial well-being, try helping them work on these traits. They can help children get ahead in many areas of life. Young people develop these traits at their own pace, and almost everyone benefits from help and practice. For example, for children younger than age five, activities like martial arts and playing pretend can develop these qualities. You don’t have to be a money expert, and you can help form a good foundation for your child’s future financial life.
By CFPB and FDIC
Parents tell us they want to help their children be smart about money. But they’re not always confident about how to go about it.
We’ve got a suggestion: Talk through your money choices with your child as you go. (If you already do this, great!) You don’t have to change anything that you choose to do with your money. But your kids need a window into how to think about spending, saving, borrowing and more. You can show them how you think about these important choices.
Next time you pay a bill, or buy something online, or go grocery shopping, try speaking your thoughts out loud. “Now I’m looking at our electric bill, and I’m checking to see if it’s the right amount. And I’m looking at the due date, so I know whether the payment is on time or late.” This talk helps your child start to understand how to think about transactions. Over time, your child can turn these thoughts into good habits.
By CFPB and FDIC
Giving children an allowance is a topic many parents discuss. Even within families, parents can disagree about whether it’s a good idea.
Research doesn’t conclusively prove whether or not having an allowance helps children achieve better financial well-being as adults. However, research does suggest how to make an allowance work well for your children, if you do decide to give one.
Don’t just hand over the money and leave it at that. Make it part of your conversations. Talk about what the family budget still covers. For example, you can clarify that the child’s meals with the family, school clothes, and school supplies are the family’s responsibility. The child’s own expenses, like clothes he wants to buy or apps she wants to add, should come from the allowance.
If you give the allowance weekly, check in each week and ask about what the child decided to do with the money. Did she save any of it for a future goal? What did he learn about spending, saving, or planning ahead? Does she want to make changes to how she spends money next time?
Some families decide to pay children for certain chores. If this sounds like your family, you can have similar conversations about what your child earned.
Whether to give an allowance at all is a choice each family should make. To make the most of an allowance if you choose to give one, commit to giving your child some of your own time and guidance along with it.
By Ashley Gordon, CFPB
Watch Leah’s story.
Just a year away from graduating with $23,000 in student loans, Leah didn’t know how she was going to make her payments. They were a constant source of stress in her life; she would lie awake at night thinking about how she was going to pay off her student debt. She was worried about her future.
We understand that fear – it’s why we built our Paying for College tool. It helps students and recent graduates inform themselves about the true cost of college and the repayment options available after graduation.
Leah learned about the Income Based Repayment option, which helped to significantly lower her monthly payments. “It’s a lot less stressful now,” she says; “It feels amazing… My husband and I don’t feel like we’re living paycheck to paycheck. I wasn’t informed when I was taking out my student loans of the reality of after college. And now students have the CFPB website to know in advance and be informed of what to expect when they graduate. I took charge of my student loan debt. Now other students can take charge of theirs thanks to the CFPB.”
Do you have a story like Leah’s? Do you want to find resources for students and graduates? Or are you interested in what other people are saying about their experiences with financial products and services? Check out Everyone has a story.
You know your kids are online, so talk to them about the risks and how their activity can impact them later: