Working in the world of banking and finance, I often get asked by parents how early is too early to teach their children about money. When should they open accounts in their child’s name, should they give them access to it, or how soon is too soon to give them a debit card?
First and foremost, it ’s really never too early to teach children about money and finances, the earlier they learn the value of money and how to manage it the better off they will be later in life.
With so much banking done online or via the drive-thru, most children don’t get to experience the magic of visiting the teller line, meeting the staff, and learning how bank accounts work. I remember how fun it was as a child to make a deposit, have my passbook updated, and watch my little savings account grow. I always encourage parents to take the time, bring your child inside the bank and let them SEE how the process works, allow them to be part of it.
How do I get started?
It’s never too early to open a savings account! Since most banks don’t allow a child to open an account until the age of 18, as the parent, you will be the guardian of the account until your child comes of age. You can see all the deposits, withdrawals, and determine what if anything the money will be spent on. We encourage you to be a monitor but let your child manage the process – only step in when you see them going astray.
A great way to teach your child to save money early on in life is by having them fill up their piggy bank with loose change and bills, and then taking them on a trip to the bank to show them how that money accumulates in their account. Once they are old enough to understand interest, you can explain how that adds to their total savings!
Once your child understands what money is and how it’s used, you should be able to explain how banks work, the value of money, and how budgets work. You’d be surprised at how quickly children understand the concept of not spending more money than you make. If you have a savings account for them already, this is a great time to explain how it works, and the difference between a checking account and a savings account. Sharing the family budget is a great way to get the ball rolling – you can read more tips on that here.
The teen years – teaching responsible spending?
Just like with a savings account, most banks require the owner to be 18 in order to open a checking account. Litchfield Bancorp offers our The Graduate Account, which unlike most checking accounts, only requires the account owner to be 16 years old to open – no parent or guardian signature needed! They get access to online bill pay, a debit card, and mobile banking! This account offers your child some financial freedom, can be used even while away at college or the military, and they can continue to use it until they turn 26. You can learn more about it here.
Typically, a good age to open a checking account for most children is at the start of high school or when they get a part time job and can take advantage of direct deposit. Most checking accounts come with a debit card which your child will be able to use to make purchases, like gas if they drive, or withdraw money from an ATM. Now is the time to help them understand the difference between a debit card and a credit card, ID Theft and responsible spending habits.
What resources are there to help me teach my children about finances?
With Google being at the tips of your fingertips, it’s easy to search the internet for help on teaching your children about finances. But at Litchfield Bancorp, we like to make your life even easier. Over the past few years, we’ve developed our Young Financiers Program designed to teach high school students about real life finances. We’ve worked along side several local schools to help educate students on topics such as Budgeting, Debt, Credit Reports, and so much more. You can access our curriculum by visiting our website: Young Financiers Program.
If you have any questions about the types of accounts Litchfield Bancorp offers, how our accounts work, or about our Young Financiers Program – give us a call or stop in. We always love seeing our next generation of account holders – so bring the kids along!
Washington Branch Manager, Assistant Vice President