By Hiper Media Factory.

On Financial Education Day, Banco Santander adds to the commitment of promoting this activity for the responsible development of communities. In 2018 alone, more than 360,000 people benefited from financial education programs carried out by the entity.

Financial education as an engine of prosper

For Santander, financial inclusion is key to reducing poverty, increasing prosper and contributing to the 17 Sustainable Development Goals established by the UN. In fact, last year the entity carried out projects benefiting more than 360,000 people in countries where it operates.

So, one of the main priorities of Santander regarding Responsible Banking is promoting financial inclusion, a reason, among others, for which it has been recently recognized as the most sustainable bank in the world according to the Dow Jones Sustainability World Index. The goal of the entity regarding financial education focuses on three axes: access through digital technologies such as the app Superdigital in Brazil, Chile and Mexico; financing by granting microcredits, especially for social entrepreneurs with low income and contributing financial solutions to people or families with economic difficulties; and resilience, improving the financial knowledge of people by teaching them how to use services efficiently and building trust to facilitate decision making.

In fact, the entity has the goal of empowering in financial terms more than 10 million people through financial education programs, microfinance operations and other tools to facilitate access to financial services by 2025.

How to teach financial education to children

Children are one of the collectives with which the entity is working most. Money is a part of our lives from childhood: having sound finances, saving and paying bills is a part of daily life. That’s whyit is important to talk to children about money with as much clarity aspossible, explaining to them that money is aresult of our effort and work.

Children tend to follow their parents’ example. If parents don’t plan their finances, it is likely that children will end up doing the same. Teaching them how to manage money, avoiding impulsive purchases by establishing priorities, and knowing the difference between what they need and what they want, are some of the challenges that parents face when they teach children about finance. When children become teenagers, it’s important to get them involved in planning the family budget in order for them to understand regular financial goals.

How to talk to children about money

It is impossible for children to appreciate money without being taught it. From five years of age, they are typically able to understand basic financial concepts. There are some aspects we have must explain to them in order to put them in the right context:

  • Mum and dad must work hard to earn money.
  • When we are paid for work, we deposit the money into a bank to be saved.
  • Money is necessary to afford important things (housing, food, school, clothes, entertainment…)
  • Every time that we with draw money from an ATM, there will be less in the bank, and if we spend everything, there won’t be any more.
  • Having more or less money does not make you better or worse person than someone else.

You can look for the right moment to have this conversation. For example, when we go to an ATM to take out money with our children, when we go shopping together, or when we are looking for an apartment to rent or to go on vacation.

The value of earnings

A good method for our children to understand what financial independence means is giving them a weekly or monthly allowance. However, they must learn how to manage it because the spending behavior and habits they develop with their first earnings will be more difficult to change in the future.

The way they receive money depends on the parents. Some families do soon a weekly or monthly basis, while others give an added value depending on gradesor good behavior. However, we must bear in mind that the goal of this method is not only to award their behavior but so they learn to manage their money.

With respect tothe amount, it will depend on the family’s capacity, but giving them lotsof money could createbad habits. First of all, it is recommended to make a list of expenses that we want the child to be responsible for, depending on the age: toys, video games, movie tickets, mobile phones… The earnings should include a specific amount which can be spent, and slightly more to be saved.

Furthermore, it is really important to explain to them why they’re getting the money, how much they’ll receive, and what responsibilities they will have.

Encouraging saving

One of the most appropriate times to start teaching children to save could be when they are longing for something. Here, we could take advantage of this opportunity to explain that they might buy it with their own money, and we will help them do it.

We can do so the following way: children must write what they want and put the paper in a visible place. Then, we can help them calculate how much is needed to save and how much time it will take them to get it. The first time they consider saving in order to get something is essential to reaching their goal and to showing them that hard work pays off.

Another tip: forget about the traditional piggy bank. Children must see how their savings are growing, that’s why the money-saving jarmust be transparent. This way they will feel more motivated.

It is advisable that their initial objectives be easily reachable in 2 to 3 weeks. As they grow up, it’s possible to extend the periods of time in order to buy more expensive things. To avoid the children becoming frustrated, we might propose that they do some work to earn extra money.

Their first bank account

Practically all banks offer savings accounts and other services specific to children and young people. In fact, many of them offer incentives like raffles, concert tickets, and videogames.

Children’s banking accounts are characterized by:

  • Total liquidity, i.e. the possibility of making with drawals or deposits freely.
  • No fees or commissions.
  • Low interest rates.
  • The account owners can range from newborns up to 25 years of age.

These bank accounts are useful for children getting used to savingtheir money and building character,as they have not only a financial, but educational purpose. Whenever you go to the bank with children, try to make them feel important, responsible, and encourage them to interact with bank employees.