How to Teach Kids about Banking at Various Stages?

Children usually do not get enough exposure to the complications of finance, which often lead them to financial troubles in the later part of their life. If you want your child to become well-equipped to handle finances, it is the right time for you to indulge in teaching kids about banking.

Go through this blog to learn more about what kids should know about banks and their terminologies. Also, you will know how you can introduce your child to relevant banking information as per their age.

Banking is the basic financial institution that everyone should remain acquainted with. So, it is better if your kid remains familiar with it sooner.

When it comes to banking for kids, the most effective way to teach them is by making them understand how effective it is for safeguarding people's money. Also, let them know how banks benefit kids, like how it increases their savings, helps them in continuing their future education, etc.

Apart from just learning the basics of finance, it is important for your child to learn about the bank, its activities, its role, and how they can be benefitted from this. 

Here are some ways your child can learn more about banking and savings at different stages.

Following these ways you can teach preschool kids about basic banking ideas:

Form Saving Habits in Them

If your kid is too small to understand the complexities of banking, start with the basic idea of saving. A piggy bank is a great way to start with. 

When your kid will start saving money in a piggy bank, they will eventually see their money growing. Introduce them to the importance of saving and form some saving habits in them.

Set Healthy Examples for Them

A child follows their parents' activities. So, the way the parents deal with money, their way of spending and saving somewhere, inculcates in the minds of children. They also try to follow the same way. 

Thus, try to set a healthy example for your children, as they will follow the same spending and saving habits as you follow.

Show Them Physically That Every Stuff Has a Price

Take your child often to the store and show them how every stuff that you purchase costs money. Like if you are purchasing a toy of their choice, ask them to contribute a bit from their savings in piggy banks. 

Also, you can ask them to hand over the money physically to the cashier. This simple action has an incredible impact on your children.

Teach Them Regarding Opportunity Costs

Teach your child about opportunity costs from the child’s perspective. Like what potential benefits they can earn by choosing one option over another. 

This will help your child to understand the possible outcomes and they will also be able to make wise decisions at such an early age.

Provide Your Child Commissions

Don’t provide your child with allowances for doing nothing. Always pay them commissions depending upon the tasks and chores they are doing. 

Whether it’s cleaning their room or doing any other household chores, paying commissions will help them understand that money is earned, and not offered just like that. 

Make Them Familiar With the Importance of Giving

Ensure to teach your child about giving. Once your child begins making some money, teach them to help out someone who really needs it. You can even ask them to contribute a little as a charity to an NGO. 

This will not only bring a change in the people they offer help to but also affect the giver.

Teach Them to Make Wise Money Decisions

Another way to teach them about banking is to let them know how to make effective money-related decisions. Ensure to teach your child how they can avoid making any impulsive buying decisions. 

Instead of giving your child what they need, encourage them to wait and think for a day or two. Then they will decide whether it’s worthy enough that they can use their hard-earned commissions to pay for it.

Take Them Often to Bank

Ask Your Kid to Show Responsibility Towards Their Bank Accounts

Teach Them How They Can Fund Their Educational Loans

Teach Them How to Plan Their Budget

You can ask your child to acquaint themselves with the habit of budgeting their savings or income. Nowadays, every child is well accustomed to using mobile devices. So, you can introduce them to some relevant and easy-to-access budgeting apps.

No matter how small their income is, they will learn how to plan their budget and the importance of doing so.

Make Them Acquainted With the Dangers Associated With Credit Cards

It is your responsibility to prevent your child from becoming a credit card victim. When they grow up and manage a bank account of their own, there are possibilities that they get hounded by some credit card offers.

These might seem attractive to them, so you must teach your child why taking debt is not a good idea at all.

Assist Them in Figuring Out How They Can Make Money

Introduce Them To the Knowledge of Compound Interest

Here are some common terminologies related to bank that a child must know about:

• Deposit: When you give some amount to the bank, it is added to your bank account.
• Withdrawal: When you take out some or all of your money from your bank account.
• Interest: It is a sort of reward that the bank pays you for not spending your money.
• Transaction: Whether you deposit or withdraw some amount from your bank account, it's a transaction.
• Investment: A certain amount you pay with the belief that its value might increase and thus help you with more money in return.
• Loan: It is the amount you borrow from someone and repay to its owner along with some interest added to it.
• Saving: It refers to accumulating some money and keeping it aside for future use.
• Debt: Similar to a loan, it is something that you owe someone.
• Credit: When you are purchasing something without actually paying cash, rather than using your credit card.

So, understanding banking terms is an essential part of financial wellness. With banks growing digitally, it becomes significant for teaching kids about banking as it will introduce them to different concepts. The earlier you demystify banks to your child, the earlier they will be able to access these institutions.

Also, in order to make them financially independent and educated, it is essential for them to get exposure to the bank, its related terminologies, functions, etc.