Modeling Good Money Management for Youth Money skills you need for life Society for Financial Education and Professional Development October 2, 2017 © 2017 Wells Fargo Bank, N.A.  All rights reserved.

Agenda Financial Capability Money Management Tips for Parents Modeling for Children Hands on Banking: Tool for Success HandsonBanking.org Educator resources

Financial Capability Building the Next Generation of Financially Capable Youth ELEMENTARY Guided Discovery Develop executive function MIDDLE SCHOOL Modeling and Instruction Build money habits and values HIGH SCHOOL Practice Opportunities Develop money skills and financial decision making

Financial Capability Concepts Knowledge Knowledge of financial concepts (inflation, compound interest etc.) Awareness of financial products and services Practical Know-how (how to make payments, how to open a bank account etc. Skills Numeracy Skills Literacy Skills Attitudes Reasons for or for not saving, borrowing, investing, etc. Attitudes Towards the future Confidence in own plans for old age Proclivity towards budgeting, Saving, lending etc. Behaviors Money management (managing day-to-day finances). Long-term planning (preparing for emergencies and retirement) Financial decision- making (ability to choose appropriate financial products) Seeking financial advice. Executive function: regulation, control, management of our thinking and actions (cognitive processes) Combination of attitude, knowledge, skills, and self-efficacy needed to make and exercise money management decisions that best fit the circumstances of one's life, within an enabling environment that includes, but is not limited to, access to appropriate financial services Center for Financial Inclusion (2013); OCC (2012) Incorporates financial literacy with the ability to understand money management so people make informed decisions Degree of choice and complex financial marketplace requires consumers to be equipped with the knowledge and skills to evaluate the options and identify those that best suit their needs and circumstances Especially important for underbanked consumers, elderly, persons with language barriers – all of which support our CSR 2020 goals 1Financial Capability Surveys Around the World — August 2013

Money Management Tips for Parents Provide opportunities for research, analysis, and to explore real-world examples Help him/her become an informed consumer Let them work (maximum of 20 hours/week) Introduce more advanced banking services and skills (direct deposit, ATM) Review how credit is established and the importance of establishing good credit (employment, future goals, etc.) Teens Offer/provide allowances as opportunities for practice Introduce 3 jars (containers) for spending, saving, and sharing/donating Discuss what is meant by responsible spending Encourage saving Set personal and family financial goals Review choices and discuss how decisions are made School Age Keep it simple and direct Teach the value of coins and everyday items Discuss saving for the future Distinguish between a want and a need Discuss why and how financial choices are made Help them to understand deferring or delaying spending Preschoolers Talk to your children about money and its uses Leading by example is a powerful way to encourage positive financial behaviors Hands-on teaching and real world experiences help set a sound financial foundation. Open bank accounts at an early age Consider an allowance as an opportunity for practice Engage children in financial discussions about the family budget, current challenges faced, and any longer-term goals or priorities Content pulled directly and verbatim from HOB.org Money skills don’t always come naturally Good parenting and some hands-on teaching can give your kids a sound financial foundation. Teens Quick answer: Teens are used to instant gratification and a few can have a hard time understanding “no.” Include them in financial discussions about the family budget, challenges the family may be facing and any longer-term goals or priorities. Teens can understand financial knowledge and apply this information to make good financial decisions. Consider providing opportunities for your teen to research and analyze financial options. Talking to your teenager about personal and family goals can help him/her become an informed consumer. Let them work - At this stage your teen may be itching to get a job to earn extra cash. You’ll want to emphasize the wisdom in balancing work during the school year with school performance. While employment can provide valuable experiences, studies have shown that employment may interfere with academic performance for teens who work 20 hours or more per week.1 If your teen is earning a paycheck, he or she may find it easier to access his or her savings account with an ATM card, a move you may or may not decide to support. Credit - importance of establishing good credit and credit score. You can help your teenager understand that one of the keys to getting the right apartment or qualifying for the loan he or she will want someday at a good rate may be a strong credit score. Be sure to impress upon your teen that responsible use of credit cards is a common way to help establish a good credit history and that paying off the balance each month in a timely manner is an important safeguard against becoming a credit risk. Problem behaviors to watch for in your teenager include: Let them practice Planning a family vacation, to help instill the value of money, diligence, and hard work. When thinking of the next family vacation, ask your children to plan it out with a specific budget. International destinations provide an added element of learning about foreign exchange. Creating a vacation schedule, pricing out airline tickets, hotel, and rental cars, and then explaining the rationale provides an exercise in understanding how much things really cost, as well as project management, organization, and leadership skills.

Allowance: To Give or Not to Give? Teaching tool and opportunity for practice Guidelines for spending, saving, sharing based on values and priorities Ability to spend as they wish Learn by doing – safe space with low stakes Allowance Considerations Fixed and Regular Tied to other responsibilities (chores, tasks beyond everyday responsibilities) Bonuses Influenced by age and responsibilities Teaching tool and practice opportunity Debate about tying to chores or not Many experts think you should give allowance regularly, so the expense of managing money isn’t lost if chores are not completed. While this is a personal decision, some parents consider offering additional money for tasks beyond everyday responsibilities. Additional money for tasks beyond everyday responsibilities Children need guidelines for spending, saving, sharing based on values and priorities You may want to allow children to spend their allowance as they wish. We all learn by doing and sometimes the best lessons can be learned through mistakes. Often the stakes at this stage are low, so it can be a safe space in which to learn. Your child’s age is a major factor in how much their allowance could be. Some experts suggest giving an allowance half of the child’s age per week or per month while others suggest giving the child’s age per week or month. For example, if a child is 10 years old, their allowance could range from $5-10 per week (or month).

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