Money education is an important and sometimes overlooked lesson that parents forget to share with their kids. It is important for kids to learn how to budget the money they have available to them and how to balance a checkbook. When kids see mom and dad pull out credit or debit cards, they may not realize that there is more to managing money and a checking account than just swiping a card. Any money management lesson also gives you a chance to spend time with your kids, and to gauge their basic math skills.
Show your kids a copy of a completed or in progress checking account register. The check register should include a running balance and entries for checks, withdrawals and deposits. If you are not diligent about tracking cashed checks and balancing your checkbook, teaching your children gives you the perfect reason to get your own balances back in order.
Give the children a blank check register for practice. Or make your own by copying two pages of a blank check register page, including the balance box at the top. Include some pretend checks with the kids’ blank register, which you can print out from the Money Instructor website. See the Resources section for a link. Discuss situations where you would use a check, including paying bills through the mail, paying someone in person when you want a receipt of payment, or when purchasing items at a store.
Discuss credits to a checking account, by creating a pretend balance in the account. Start with an easy amount, like $100. Talk about the ways money can enter the account including direct deposit from an employer, a deposit made in person or by mail, a transfer from another bank account, or from interest. Explain that these line entries will be added to the balance.
Talk about the debits to a checking account. Cover purchases made online, in a store, on the phone or by mail. Discuss bank service charges and ATM withdrawal fees. It may be a good time to explain that a bounced check or a low balance may result in an additional bank fee which needs to be subtracted from the balance. Show them where the payment, fee and withdrawal column which is near the center of the page.
Practice writing out line entries. Start with a check number or transaction type. Make up your own abbreviations for transactions, if that is easier to explain than the standard abbreviations. For example, use “WD” (or ATM) for withdrawal, or “DEB” for a debit card transaction in a store. Enter the date of the transaction, typically the month and the date, not the year. Show them where to write in the transaction description. Explain that if they ever want to look back and find out what a payment was for, it is easier to write down now than try to remember later. Write in a payment amount and have them subtract it from the balance. Write in a couple of deposits and have them add the amount.
Teach kids how to balance a checkbook with a printed or electronic statement. Emphasize that the balance which shows up on an ATM receipt may not be the same as how much money is available to them. Explain that there may be pending checks or ATM fees which have not cleared yet. Match the rest of the transactions in the checkbook with the statement. Write in any additional bank fees, deposits, payments or withdrawals which were not recorded in the checkbook. The balance in the book should match the balance on the statement. Go through the statement starting with cashed checks. Use a red pen or green pen to place a check mark in the checkbook. Explain that to find out how much money is currently available, any pending or uncashed checks need to be subtracted from the balance. Be sure to invite your kids to sit down with you each month and watch or help with the process. When they have a firm grasp, let them do it on their own, for practice.
- Do not assume that any of this practical information will be taught in school.
- Do not instruct kids to round out the numbers when entering figures in the checkbook.
- Do not pass on money anxieties to kids, teach them how to manage their money properly.