How and Why to Teach Kids About Banking

teach kids about banking

One of the most important things kids can learn before they get their first job is how all aspects of banking work. Unfortunately, they only get a cursory glance at money in school because the school thinks the family should teach about banking, and parents think the schools are teaching about banking. There are kids at grade five and above who cannot make change or write a check. Children need to learn lessons about banking when they are young, so when they are on their own they can make good financial decisions.

Don’t Count on the Schools to Do It – Aside from teaching kids to count money, the schools do little to teach kids about banking, and how it will affect their lives. Many school districts feel that it is the parents’ responsibility to teach about money and banking; yet there are a lot of adults who have issues with understanding banking themselves, let alone teach it. You don’t have to be a CPA to teach your kids about money, banking, and budgets. You may want to check with your school to see how much preparation kids are getting in the area of finance and banking.

Make It Real – In order for kids to understand about banking, they need to see real examples. While some parents may try to present the information in a simulated manner, teaching with real examples helps kids see how banking is important and part of everyone’s lives. Many kids have misconceptions about aspects of banking such as ATMs, credit cards, and checks. If you use real examples, and show kids how banking works in their own family, they will gain a better understanding than they would if they were working on a simulation.

Explain AND Demonstrate – It’s not enough just to explain what you are doing; you need to demonstrate what you have explained whenever possible. It’s not enough to tell a child how to use the ATM; you need to show them to make the lesson more concrete and meaningful. As ideas become more abstract, telling and showing make the concept more grounded and more easily understood. Your child will have to use the skills you taught them, so it is important to make sure the concepts are fully understood and can be demonstrated if required so to do.

Teach ALL Aspects of Banking – Taxes, insurance, and investing are part of banking, though more removed than teaching about checking and savings accounts. Kids need to understand how taxes work; that they pay tax on items they purchase as well as on money they earn. If there is an aspect of banking that you don’t understand or can’t explain properly, you should seek out someone who can explain it. Those who work in the industry, such as CPAs or insurance agents, would be more than happy to help you explain their field of expertise to your kids.

Let Them Try – After you have taught a lesson and have demonstrated the concept, kids should be allowed to try out their new skill. Young children can count actual money in a jar or wrap coins to practice that skill. As children grow older, they can have savings accounts, checking accounts, and ATM cards of their own that are set up so that parents can have access to the account to see that the child is maintaining the accounts appropriately. It is in this step that kids can actually show they have mastery of the skill or that they need a refresher on it.

Banking and money management skills are essential for kids to learn in a supported environment before they have to use those skills for themselves. Kids who understand and can perform money related tasks will be in a better place financially as they shouldn’t fall into problems with credit cards or borrowing money. Not all lessons are learned in school, and when kids can learn from their parents, the lessons become closer to home and more meaningful than learning them abstractly in school.


written by: Lindsay Truman


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10 years ago

I wonder how much is natural inclination and how much is learned? I’m just curious because we have four kids, three of whom are similar w/their spending/saving and one who is completely different.

I love the examples you’ve put up here for things to do to encourage healthy money habits with the kids, especially not counting on anyone else to do it for you!

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