Take it to the Bank: Build Your Kids’ Financial Responsibility

I am happy to share with you a special guest post from a senior financial planner at T. Rowe Price, Stuart Ritter CFP®, on how kids can learn to manage money for success in life.


As a father of three, the keen interest my children show in money and making purchases often reminds me that there are teachable money moments around every corner.

When my own daughter, at the age of six, asked if she could have a credit card so she could buy anything she wanted, I realized my young children often take everything they see at face value.

A few years ago a friend of mine told me about a trip to the ATM with his daughter. They stopped for cash and when he later told her they didn’t have enough cash to purchase an ice cream treat, she asked if they could go back to the ‘Magic Money Wall’. Moments like these can be a quick and easy signal that it is time for a child to learn that money doesn’t grow on trees – or freely spit out of a magic wall – and can be an opportunity to explain how banking is important when it comes to helping us manage our money.

There are two things you can talk to your kids about with banking: how money works and what to do with it. The bank account becomes a central player in money conversations.

For instance, when my wife and I write a check in front of our kids, we explain it’s a note telling the bank to take some of the money in our account and put it into someone else’s account to pay for something we bought.

At the ATM, we consistently remind them that our money was earned from us going to work each day and doesn’t just magically appear in the bank. When making big purchases, like a family vacation, we talk about using our savings account to plan ahead and help our kids understand a vacation is more than a simple purchase.

By starting kids early and helping them open and manage their first bank account, you can create a great opportunity to share financial basics and responsibility. Here are a few tips to help you and your kids get the most out of this important rite of passage.


Set a Goal

Think about what your kids may want to purchase and frame it as a goal for them. Help them understand how much money they will need and an approximate timeframe for reaching their goal.

Keeping a specific goal in mind will help kids stay motivated and interested in the banking process. It will also help them understand what they are doing with their money and why it goes into the bank.

Encourage and Reward

When your child receives money for allowance or a special occasion, challenge them to deposit a percentage of that money directly into their account. Consider matching a percentage of their deposit to reward kids for making smart saving decisions.

Monitor Progress

Explain to your kids that they will receive monthly statements from the bank. When the statement arrives, point out recent transactions, interest earned, and check the balance. Review the statement together to help them understand the progress they are making towards their savings goal.

Keep it Interesting

To help engage your children and keep them interested in the banking process, take them with you when you open their account and let them ask the banker any questions they have. Even if the questions seem silly to you, chances are, they will help your child build confidence about asking money questions.

Learn the Ins and Outs

There is no doubt your child will want to make small purchases every now and then. Each time they withdraw money from their account, direct them to complete a withdrawal slip and then review the updated statement to reflect their new balance. Staying aware of how close or how far away they are from their goal will create healthy spending habits. As a bonus, kids will gain some extra math practice when completing deposit and withdrawal slips!

Visiting the bank and opening an account is a great opportunity to teach kids financial basics, especially when they have a vested interest (their own money!).

To help parents and kids explore these and other money concepts, T. Rowe Price launched MoneyConfidentKids.com, an online hub providing free games for kids, lessons for educators and tips for parents focused on goal setting, spending versus saving, inflation, asset allocation, and diversification. Helping kids look past the piggy bank and begin thinking about money at an early age will prepare them for a financially successful future.

BankingForKids2Stuart Ritter is a senior financial planner for T. Rowe Price, a global investment manager. He and his wife are the parents of three young kids. Stuart was one of T. Rowe Price’s primary collaborators with Walt Disney Imagineering and Walt Disney Parks & Resorts Online on the creation of The Great Piggy Bank Adventure®. He is a strong advocate for starting earlier in having money conversations with your children.

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