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Teaching Banks

Posted by Elisa Taub
Teaching Banks

It’s never too early to teach your child about the value of a dollar, and with this handy set of piggy banks learning about money is a breeze.

In our family, we started giving the kids an allowance at the age of 5. One dollar for every year. It may sound like a lot, but they don’t actually have access to all of their funds. Each week they divide their allowance between their three banks:

Spending: This is the money they actually have access to. Money they can use to buy whatever THEY want (within reason of course).

Savings: Allow this money to grow until the bank is filled and then open a savings account for your child at a local bank. It’s fun for them to see the interest they earn and learn about how a bank functions. (i.e. you can’t use the money machine unless you have put money into the bank). I tell my kids this is the money they will use to buy a car for themselves one day or travel with after college.

Charity: Allow this money to grow as well and then help your child designate a charity they would like to support. We usually do this once a year in December, but sometimes more, depending on what touches their lives. For example one year my daughter was studying the rainforest at school and she wanted to donate money to help save the rainforest. This week we all emptied our piggy banks to help the current crisis in New Orleans.

Because their weekly allowance is often not equally divided by three, your kids will have to make their own decisions about where their money will go and thereby begin to learn the rudimentary skills of money management which they will draw upon later in life.

But just setting up the system is not enough. It is important for you, as parent, to give them the opportunity to use these funds. When my kids are at the store and see something they want, which I don’t think they need (or I don’t want to buy) I remind them they can buy it themselves with their allowance.

It’s often hard for me to see them make what I think are poor choices, but it is an invaluable learning experience. Once in a while if the item is over $15, I’ll kick in for 1/2 the cost. Otherwise they will be saving for so long they won’t have many chances to learn these important lessons.

It is also important for your kids to physically handle the money. Whether that means bringing the piggy bank with them or paying you back after a shopping trip. This will help the younger ones learn the value of the various coins, and the older ones can practice their math skills counting out exact change.

With these teaching banks, and a little time to watch their money grow, your kids will be well on their way to an informed financial future.

Buy Teaching Banks

Looking for somewhere your child can donate his/her money?Check out our list of children's charities