9 Tips to Teach Kids Banking Basics
Share
Want to raise money-smart kids? Here's how to teach them about banking:
- Explain banking basics
- Use piggy banks and jars
- Play money games
- Open a real bank account
- Use allowances to teach budgeting
- Teach about online banking
- Explain different bank accounts
- Visit a bank
- Make saving a family activity
Why it matters:
- Kids form money habits as young as 5
- These are real-world skills they'll use forever
- It brings families closer and normalizes money talk
Quick comparison of account types:
| Account Type | Use | Interest | Withdrawals |
|---|---|---|---|
| Savings | Store money | Higher | Limited |
| Checking | Daily spending | Low/none | Unlimited |
Start teaching your kids about banking today. It's easier than you think, and the payoff is huge.
Related video from YouTube
Explain Banking Basics
Let's break down banking for kids. It's not as tricky as it sounds.
What is a Bank?
Think of a bank as a giant piggy bank for adults. It's where people keep their money safe and get help managing it.
Banks do three main things:
- Store money
- Give you access to your cash
- Lend money for big purchases
As Kids' Money puts it:
"A bank is a financial institution that holds and lends money."
Banking Lingo
Here are some key terms your kids should know:
| Term | Meaning |
|---|---|
| Account | Your personal money spot at the bank |
| Deposit | Putting money in |
| Withdrawal | Taking money out |
Next time you're at an ATM, make it a teaching moment. Say, "We're making a withdrawal now!" It helps kids connect words to actions.
Did you know? Banks protect your money up to $250,000 with FDIC insurance. It's like a safety net for your cash.
Want to make it fun? Play "bank" at home with toy money. Show how deposits and withdrawals work. Kids learn faster when they can touch and see things.
Jayne A. Pearl, who wrote "Kids and Money", says:
"Turn your day-to-day activities into learning experiences."
So, chat about banking during everyday stuff. At the store, explain how you're using your bank money to buy things. These little talks can really boost your child's grasp of banking basics.
2. Use Piggy Banks and Jars
Piggy banks and jars make saving real for kids. They can see and touch their money, which is perfect for young learners.
How Saving Works
Here's a simple way to show kids how saving adds up:
- Get a clear jar
- Save $1 each week
- Count the money together
- Watch it grow
This hands-on method lets kids see their progress. It's a great way to show how saving a little bit often can make a big difference.
Set Saving Goals
Help your kid pick something to save for. It teaches planning and patience.
Here's what to do:
- Pick an item (like a toy)
- Find out how much it costs
- Figure out how long it'll take to save
- Keep track on a chart
Beth Kobliner, who wrote "Make Your Kid a Money Genius", says:
"By age 7, kids' money habits are already set. Start early with hands-on lessons."
Try this system:
| Jar | For | Example |
|---|---|---|
| Spend | Daily stuff | Candy |
| Save | Big items | New bike |
| Give | Charity | Help animals |
Use clear jars so kids can see their money and understand what it's for.
Once money goes in a jar, it stays there until used. This teaches kids to stick to their money goals.
For older kids, try a digital counting jar. It keeps track of every penny saved, making it fun to set goals.
3. Play Money Games
Kids learn best through play. Money games make banking fun and help children grasp key concepts.
Banking Games for Kids
Here are some games to teach your kids about money:
- Exact Change: A card game for kids 6+ to learn counting money and making change.
- Money Bags: A board game for 7+ using plastic coins to buy items and practice counting.
- Monopoly Junior: Kid-friendly version for ages 5-8, teaching basic money management.
Make a Pretend Bank at Home
Set up a play bank for real banking scenarios:
1. Create play money
Cut paper into notes and assign values. Let kids design their own currency.
2. Set up teller stations
Use boxes or small tables as counters. Kids can be tellers and customers.
3. Make deposit slips
Create simple forms for "depositing" money into pretend accounts.
4. Practice transactions
Role-play common bank activities:
| Activity | What Kids Learn |
|---|---|
| Depositing money | Saving habits |
| Withdrawing cash | Account management |
| Applying for a loan | Borrowing concepts |
| Opening an account | Basic banking services |
5. Use toy cash registers
These help kids practice handling money and giving correct change.
Playing banker at home? It's not just fun - it's a crash course in money basics. Your kids might even teach you a thing or two!
4. Open a Real Bank Account
Want to teach your kid about money? Open a real bank account for them. It's hands-on and shows them how banking works.
Pick the Right Account
Look for these when choosing:
- No monthly fees
- Low or no minimum balance
- High interest rates
- Easy-to-use mobile app
- Educational tools
Some top picks:
| Bank | Account Type | Key Features |
|---|---|---|
| Capital One | Kids Savings Account | No fees, no minimum balance |
| Alliant Credit Union | Kids Savings Account | 3.10% APY, higher than average |
| USAlliance | Youth Savings Account | Up to 7% interest rate |
Opening the Account
1. Gather documents
You'll need your child's birth certificate or passport, Social Security number, your ID, and proof of address.
2. Choose a bank
Pick an FDIC-insured bank or NCUA-insured credit union.
3. Visit the bank
Most kids' accounts need in-person setup. Bring your child - it's a learning experience.
4. Make a deposit
Some banks need a small initial deposit. Capital One doesn't.
5. Set up online access
Help your kid use the bank's app or website.
Note: A child's account is usually joint with a parent. You can monitor and guide their banking.
"A University of Michigan study found low- and moderate-income kids with savings accounts (even under $500) were 4x more likely to graduate college."
Starting early isn't just about saving money - it's about building lifelong habits.
5. Use Allowances to Teach Budgeting
Allowances aren't just free money. They're a tool to teach kids about cash.
Set Up an Allowance Plan
Pick an amount and schedule. Many parents go with $1 per year of age, weekly. A 10-year-old? $10 a week.
Quick start guide:
- Set amount and day (like $10 every Friday)
- Decide: tied to chores or not?
- Be clear on what it covers
"Allowances help kids learn to spend. Our kids get money no matter what." - Rob Bertman, CFA, CSLP®, CFP®
Try the Envelope Budget Method
Want a simple way to teach budgeting? Try envelopes:
- Grab three envelopes
- Label: "Spend", "Save", "Share"
- Help split the allowance
Here's a common split:
| Envelope | % | Use |
|---|---|---|
| Spend | 70% | Small buys |
| Save | 20% | Big items |
| Share | 10% | Gifts, donations |
This shows kids where their cash goes. As they grow, add more categories or use an app.
Let them mess up. It's how they learn. If they blow all their "Spend" cash? Don't save them. They'll learn to plan better next time.
sbb-itb-4efb34a
6. Teach About Online Banking
Online banking is a must-know for modern money management. Let's get your kids up to speed.
Banking Apps for Kids
Several apps can kickstart your child's digital banking journey:
| App | Cost | What's Cool |
|---|---|---|
| Greenlight | $4.99/month (family) | Debit card, chore tracking, savings goals |
| GoHenry | $4.99/month per kid | Fun money missions, instant notifications |
| Till | Free | No monthly fees |
| Step | Free (standard) | No monthly fees |
| FamZoo | $5.99/month | Subscription-based |
These apps let kids handle money while you keep an eye on things. Greenlight, for instance, lets you set up chores and zap allowances online. GoHenry turns finance into a game with "money missions."
"These products can spark important money talks with your kids." - The New York Times
Stay Safe Online
Online safety is crucial. Here's what to teach:
- Always log out
- Guard your device in public
- Keep software updated
- Switch up passwords regularly
- Never share account details
- Set up alerts for transactions
- Don't click random links to access your bank
- Learn to spot fake shopping sites
7. Explain Different Bank Accounts
Kids need to know about bank accounts to manage money. Here's the lowdown:
Savings vs. Checking Accounts
Savings and checking accounts do different jobs:
| Account Type | Use | Interest | Withdrawals |
|---|---|---|---|
| Savings | Store money | Higher (up to 3-4% APY) | Often 6/month |
| Checking | Daily spending | Low or none | No limits |
Savings accounts are for goals. Example: Alliant Credit Union Kids Savings Account offers 3.10% APY with just $5 minimum.
Checking accounts? For everyday use. They often come with a debit card.
Some banks offer both. Capital One's Kids Savings Account lets kids create multiple savings accounts. At 8, they can get a checking account with a debit card.
What is a Debit Card?
A debit card is a plastic card linked to a checking account. It's great for kids to learn about spending:
- Takes money straight from the account
- Kids can only spend what they have
- Helps track spending through banking apps
Debit cards don't involve borrowing. That makes them safer for kids learning about banking.
"A debit card in your teen's name can teach them to spend only what they have."
8. Visit a Bank
A trip to the bank can bring money concepts to life for kids. Here's how to make it count:
Take a Bank Tour
Many banks offer tours for kids. SunTrust Bank, for example, lets children explore real money collections. During these visits, kids can:
- See different types of money
- Count cash
- Learn about denominations
- Get a glimpse of bank accounts
"At SunTrust Bank, Penny and the KidVision VPK Kids explore a real money collection. They learn to identify and count money, understand its value, and get the basics of bank accounts."
Can't visit? Try a virtual tour. Young Americans Bank, designed for kids up to 22, offers online tours showing the bank, staff, and money tips for young customers.
Talk About Kids' Accounts
When you visit, chat with a banker about children's accounts. Ask about:
| Topic | Questions |
|---|---|
| Account Types | What savings accounts do you have for kids? |
| Fees | Any monthly fees or minimum balances? |
| Interest Rates | What's the interest rate? |
| Perks | Any special bonuses for kids? |
| Age Requirements | When can my child open their own account? |
Some banks offer perks for young savers. Mid Penn Bank's My Savings account gives kids:
- A $5 bonus for $25+ deposits within 30 days of their birthday
- Free prizes during visits
- A free piggy bank
Most banks let parents, guardians, or grandparents open accounts for children. This visit is your chance to start that process if you're ready.
9. Make Saving a Family Activity
Want to teach your kids about money? Make saving a family affair. Here's how:
Set Family Money Goals
Pick savings targets together. It's a great way to show kids the value of working towards financial goals.
Make a goal chart. Use pictures to show what you're saving for - maybe a vacation or a new TV. Track your progress and celebrate when you hit milestones.
Turn saving into a game. Try an energy savings scavenger hunt. Go around your house looking for ways to save energy and money. Kids can spot:
- Lights on in empty rooms
- Appliances that could be unplugged
- Drafty windows
This teaches kids about saving resources and money at the same time.
Talk About Family Finances
Open money talks help kids learn key financial lessons.
Set a family spending limit. Agree on an amount that needs a family chat before spending. Let's say $100. It teaches kids about budgeting and smart spending.
| Spending Amount | What to Do |
|---|---|
| Under $100 | Decide on your own |
| $100 or more | Family discussion |
Let kids join in on financial planning. Include them in talks about family budgets and spending. It gives them real-world money experience.
"The best way parents can teach their children good financial habits is by discussing the money decisions that they make." - Mitchell Kraus, certified financial planner
Plan cheap family fun. Look for free or low-cost events in your area. Show kids that fun doesn't have to be expensive. Try:
- Free park concerts
- Museum free days
- Nature hikes
- Community festivals
Conclusion
Teaching kids about banking is crucial for their financial future. Start early to help them build good money habits that'll stick.
Why does this matter?
- Kids form money habits as young as 5
- These are real-world skills they'll use forever
- It brings families closer and normalizes money talk
Don't just have one chat. Make money talks a regular thing.
"The sheer act of talking about it brings confidence." - Jen Hemphill, Financial Expert
As you teach your kids about banking:
- Be open about money
- Use real-life examples
- Involve kids in family finances
- Make it fun with games
By doing this, you're setting your kids up for smart financial choices as they grow.
Start the conversation today. Your kids will thank you later.
FAQs
How to teach kids about banks?
Teaching kids about banks doesn't have to be boring. Here's how:
- Use a clear piggy bank
- Play pretend bank at home
- Count real money together
- Visit a bank
- Open a kids' savings account
Let them see their money grow and manage it themselves. As Jayne A. Pearl, author of Kids and Money, says:
"Turn your day-to-day activities into learning experiences."
How to teach children financial responsibility?
Start early with these steps:
- Give an allowance
- Set savings goals
- Teach about work and earning
- Use spend, save, and give jars
- Show good money habits yourself
Emma Graff from First Merchants Bank puts it well:
"The goal is to make them aware of finances and financial responsibility."
Let kids budget, save for what they want, and learn from your example.