If only it were as easy as a certain real estate board game – but banks can seem complicated to grown-ups, let alone kids. When your child is ready to open his/her first account, take them on a field trip to your bank or credit union. A personal banker can help you explain how a bank stores money, what interest is and how deposits/withdrawals work.
You can also introduce the two primary bank accounts – savings and checking – and how each functions. Grab your checkbook and walk your child through how to fill out a check, show them how a debit card works, and teach them how to keep an account balance up to date (overdrafts are no fun).
Banks and credit unions are an important part of everyday life, so here’s some more information about how they operate:Bankaroo - The Top 6 Things Your Child Should Know About Banking
Here’s a common scenario: your child must have that next greatest thing, and the time in between birthdays and holidays seems like an eternity! They may have some spending money earned from an allowance or a job which, undoubtedly, is burning a hole in their pocket. Now’s a great time to teach your child about spending, saving, making purchases on credit and why their financial future depends on these choices.
Educating your child about smart spending from the get-go will set them up to be conscientious money managers later in life. A few important lessons to bestow are how to create and stick to a budget, planning for the unexpected and spending wisely. And when covering credit, things like interest, monthly payments, credit score and debt are key.
Here’s more information to get the conversation rolling:The Mint - About Cash & Credit
PBS Kids - Managing Money Spending and Saving
U.S. News - How to Teach Your Kids About Credit Cards
Family Education - Teaching Your Child About Money Management
Where did all my money go? That’s a common question to expect when your son or daughter gets his/her first paycheck. (As adults, we often wonder the same thing.) This is a good time to walk your child through the ins and outs of a paycheck stub. From line-item deductions to taxes to gross vs. net pay, it’s important that they understand why their take-home isn’t what they expected.
One way to prepare your child for real-world paychecks is to deduct “taxes” from their allowance. You can withhold a percentage that represents their tax bracket, and put it away for educational supplies/activities, health and safety items or transportation (new bike, skateboard, etc.).
Here’s some further information about paychecks and deductions:The Mint - How to Decode Your Paycheck
