Capital One and ING Direct come together and report that as many as 25 percent of teens can’t ascertain the difference between credit and debit, according to a recent survey. In a recent survey from ING Direct USA and Capital One, its parent company, 24 percent of study participants responded that they thought debit card spending involved borrowing money from the bank, not using a card in place of one’s own money. This means, then, that these respondents had credit and debit confused.
This study asked 1,000 teenagers (between 12 and 17 years of age) several questions about earning and saving money, gathering their concerns and conceptions on such things. Researchers also found that nearly half of teens earn most of their spending money from jobs outside the home and only thirty percent of teens received their cash from allowances or from earning money for performing household chores. To get a better read on actual statistics, though, researchers also asked the parents of each of the teenagers involved about their personal finance behaviors.
This survey gathered responses from a sample of 558 parents who confirmed that while most families are ready to have a discussion about drugs or sex, less than 25 percent of adults in the United States have any kind of plan regarding talks about money, especially with their kids. Strangely, though, only one in five of these parents actually confessed to being poor financial role models for their children. This is an extremely important statistic regardless of the present state of financial integrity in the United States as the ability to make sound financial judgments impacts the kind of life you can live: where you live, how you eat, where you shop, how well you can handle medical emergencies, the kind of car you drive, etc.
In light of these results, Capital One and Search Institute have launched a joint website at Bankit.com that aims to help parents improve communication with their children regarding money. The site’s editors, though, offer a little advice that can help just about anyone looking to improve the financial education of their children.
First of all, they advise that parents need to keep the conversation as simple as possible. Instead of trying to educate children by exposing them to the broad scope of financial health, parents should focus setting financial goals and then taking small daily or monthly steps towards achieving them. For children, these “goals” could be something simple like a new toy or video game or something a little bigger like a day at the amusement park or county fair. Think in terms of “experiences” that will make a lasting impression so they will want to continue this responsible behavior.
Secondly, you should teach your kids the importance of money management by showing how intricately it is intertwined with daily activities. Teach kids to help hunt for bargains when shopping-whether online or in person-in order to save money. Use the money saved as a reward for their hard work and commitment to frugality by offering a commission on the savings or planning a fun family event.
Finally, these experts want to make sure that parents know the most important thing to teach your young ones is you are capable of doing what you teach. If you are going to hold your kids accountable for their finances, you have to be accountable to yours. Just as you would set an example by saying “please” and “thank you,” so should you spend and save money responsibly in order to set an example for how your kids should think about money.
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