Teaching Children about Checking Accounts

If you are interested in helping your children become financially literate, then you can't afford to overlook the importance of checking accounts. Luckily, teaching children about checking accounts isn't all that difficult, and if done properly can be really fun for you and your children. To get the most out of teaching this subject, use the method outline below. Since all children are a bit different from each other, keep mind that you may need to tailor this method to better suit your needs.

1. Teach according to age. While it would be nice to say that you could teach all children the same way, the truth is that you can't really. This is particularly true when the children are aged differently. With younger children you will want to approach the whole thing more like it is a mathematics problem, whereas with older children and teens you can probably go into more detail.
2. Explain the purpose of banks. Begin teaching children about checking accounts by talking about the purpose of banks. Banks are designed to help store and protect your money so that you do not have to carry around a huge amount of cash, and even pay you a bit so that you will keep your money in their vaults (that is the interest that banks pay).
3. Explain the purpose of checks. Since it can be a bit of a hassle for people to have to go to the bank and withdraw cash every time they need to purchase something banks created the idea of checks. In short checks are a contract between you and the vendor, where the check states that you are agreeing to pay the vendor the amount that is written. When the check is presented to the bank by the vendor, the bank then transfers the agreed upon amount of money, and everyone is happy.
4. Explain the purpose of debit cards. Over the years, people have gotten a little tired of writing checks, and due to some bad eggs, some vendors have even stopped accepting checks. To further help their clients, banks have started issuing debit cards. Generally speaking, debit cards act in the same way that credit cards do, except for one major difference. That difference is that debit cards are tied directly to a preapproved amount of money (your account) and will only work when you have funds in the account.
5. Explain the purpose of a register. Since checks and debit cards allow you to spend money that you don't physically possess at the time, you need to keep track of what you are agreeing to pay. That is why banks give you something called a register. The register is where you keep track of all the money that goes into, and out of, your checking account. Any time that you write a check, or use your debit card, you need to write down the amount. Subtract that amount from what you had in the account previously, and you will then now what you currently have.
6. Practice a bit. Get a bit of practice in with your children by either getting some blank registers and dummy checks from your bank, or by creating or downloading your own. With younger children you can pretend that they are trying to purchase things form you like you are a store, or a restaurant, or so on. Make sure that you walk through each of the steps on filling out the check, and how to use the register.
7. If old enough, get a child their own account. Older children can get tired of the practice real quick, so you may want to consider allowing them to open their own checking account. Some banks have special types of checking accounts for students, and other young individuals. The could maintain this account with their allowance, or if they are old enough, their after school jobs. Just be sure that you discuss thoroughly what could happen if they write a check that they can't cover.