A routine banking activity or a trip to your financial institution can be a great way to introduce your child to the financial world. All you need are some small, basic and consistent lessons to help your child absorb and retain new financial knowledge and habits.
Here are some lessons you can teach:
Consistent saving. Do you have a savings account or other savings vehicle that you keep at a financial institution for your child?
You can use this account to teach your child the habit of saving. Bring your child with you when you make your regular deposits into the account every month. If you use electronic transfers or automatic deposits, you can take a few minutes every month to show your child or children the new monthly savings deposit on their account statements.
The point of this lesson is not the specific amount saved every month. It’s the habit itself, of putting a little bit of money away every month, and watching the total amount grow from small, consistent deposits.
This can be a powerful lesson for children.
A savings account that you manage gives them a direct example to follow when they grow older and begin to manage their own finances.
Basic banking. Debit cards, credit cards, loans, taxes, retirement accounts, investment vehicles –when your child turns 18, there’s going to be a world of financial complexity to sort through and manage, so it’s important to start early with fundamentals.
Try taking one check to pay one bill, and explain what you are doing as you go along. You can make a game of asking your c hild to match names, dates and amounts between your bill and your check. Later, you can show your child how you record that transaction on a check register, and how you subtract the amount from the total to make sure that you haven’t overdrawn your account.
Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 19 years experience in retail banking and with financial institutions in Guam and Hawaii. You can email him at firstname.lastname@example.org