Welcome to Raising Money$mart Kids!
What do YOUR kids know about the value of a buck? If you're like most families, finances aren't often discussed. Some parents feel that talking about money makes their kids feel like they're poor. Others may not know where or when to start to help their kids learn about budgeting or business or banking.
Here at Raising Money$mart Kids, you will find articles on everything from setting up an allowance to running a lemonade stand to helping kids make better purchase decisions. You can ask questions get help from the community.
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Sunday, April 3, 2011
B is for Banks
I was probably 10 or so when I opened my first account at the institution my grandparents banked with. I was presented with a sleek deep red passbook protected in its little plastic sleeve. I loved going to the bank with my grandfather and having the teller update my passbook with the monthly interest. It was only a few cents in the beginning but it was my introduction to the magic of investing. To that point, I had never understood the concept of passive income. It seemed surreal that the bank would give me money every month without me having to do anything for it.
In today's banking system passbooks are few and far between and most banking is done electronically-- with no candy bowl. And, yet, it is still an important skill for kids to learn once they are starting to outgrow their piggy bank stage. Many banks still offer tours for children where they can see what happens in a banking transaction and check out the vault (usually, the coolest part of the tour for younger children- although they can get disappointed that it isn't filled with bars of gold).
Take your children with you when you go to the bank and explain to them what you are doing (withdrawing, depositing, paying bills, etc.) Allow them to have their own account when they have mastered the piggy bank. Explain that the bank is taking care of their money and lending it out to others while it's there. That's what creates the interest income. The bank makes money from the deposit and gives some of it to the depositor.
Letting your child open an account and begin to build up a savings account balance is the first step in teaching them to save and invest money in the long term.