Banking and Your Children: Teaching Financial Literacy


Banking and Your Children: Teaching Financial Literacy

Banking and Your Children: Teaching Financial Literacy

Making sure children are fiscally literate is one of the hardest yet most rewarding journeys a parent can embark on. The key is to teach children good money habits early and maintain these teachings into adulthood.


Once a parent thinks a child is adequately capable of understanding fiscal concepts, they can begin teaching the very basics. There are many ways to show children how money works, whether with fake money, taking them to the store, having them watch the process of exchanging money for goods or even showing children receipts from shopping trips.

After children have learned the basics of how money works, the most natural progression is to deepen their understanding of banking and how to properly manage their own money. Perhaps a parent can take their child in to the bank to see how depositing money and making transactions works, or parents can choose to show children online banking processes. Many parents find a weekly allowance system to be helpful, but every child is different. If parents take the allowance route, they can set up four jars: one for spending, one for sharing, one for saving, and one for investing. This provides visual learning for the child. Parents can alternatively have children set up short term goals, such as saving for a toy.


If the child is comfortable with the idea, parents can help preteens find simple jobs like babysitting or snow shoveling to earn and save money.

Parents can also include children in their own financial planning. Little things like letting children help in grocery store budgeting or paying bills can teach children the importance of positive financial habits and the actual cost of living.

It is also important to teach children the value of giving. After asking a child what type of cause they would like to support, parents can work with the charity on behalf of their child. This can include the purchase of food or supplies for food pantries or dog shelters with their giving fund. Every little bit counts, so even if parents would prefer their children give their time or talent rather than money, the importance of giving is a lesson that will stay with children into adulthood.


The teenage years are where the real work begins, for children and for parents. There are several ways parents can encourage their children’s financial literacy. One way is through a job where parents can help children understand their paychecks. It may also be appropriate to help teens set up a savings plan that allots a certain amount of money for spending and a certain amount for saving.

Fun fact: If a bank account is deemed necessary, The Savings Bank offers a SmartStudent Checking with no minimum balance that children as young as sixteen can open with a parent or guardian. Visit to learn more.

Parents could continue a monthly allowance if they wish, shifting to a one-time distribution to help teenagers learn to take responsibility for their spending habits.

This is also the time to start planning for the child’s future goals. This may include saving for a car around the age of thirteen or fourteen, saving for college or trade school if the child wishes to go, or any other savings plan for the child’s future.


When children become adults, it is usually time to loosen the reigns on their personal finances, but that does not mean parents should stop teaching good financial habits. Some parents may find it important to talk to children about securing their bank accounts and phones to avoid identity theft. Others may need to make sure they understand debt accumulation and the importance of paying off monthly balances in full when possible.

Parents may also find it important to make sure a child understands the power of investments. This would help them understand how they can accomplish their long-term financial goals, such as getting married or purchasing a house. If possible, it is recommended young adults hold back around ten percent of their income to reach these goals. However, this percentage will depend entirely upon the individual. Work with your child to find what is best for them. This can also include information on 401ks and retirement saving.

Many parents would rather not discuss finances with their children; however, children would like to learn about saving and budgeting techniques. Fiscal responsibility is crucial to a child’s development as a successful adult and these habits must begin with the parents.

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