Banking the Basics

Banking basics for Kids & Teens | royal Bank of Scotland

Banking basics for kids and teens

Talking to your children about banking and money management is probably easier than you think. Bring up the topic when they’re small and keep introducing new ideas as they grow. Here are some ideas to help you bring up the subject:

You can open one for them anytime and use it to save any money that they’re given as a gift. Perhaps you could top it up when if you have a little to spare. When you’re ready, take them through their account statements and show them how much went in, and how interest was paid. Show them how their money is growing and explain that they need to save before they can spend.

In an increasingly cashless world, it’s important to talk ‘invisible’ money. Take them to a cash machine and tell them where the money comes from. It isn’t just magic money coming out of a whole in the wall. Show them the money coming out of your account later using online banking. It’ll help them understand that a bank account is a good way to keep track of your money. It’s also a good idea to talk about shopping online too, and explain why it can be risky to enter your details online and how to shop safely online.

When they want something new, set them a savings goal. Explain to them needs (food) versus wants (toys) at the same time. This will help them understand why sometimes you have to save and wait before you can buy something you want. Get them to set aside some or all of their pocket money until they’ve reached their goal. They’ll be able to see their money growing in their account and it’ll help teach them that they should always save a portion of what they earn.

You can help them be better with money by letting them plan and budget for an activity they really want, like having a day out or having a birthday party. Teach them how to set a budget and get them to work out how much each part will cost. This will help them to see that budgeting makes their money go further.

It’s a good idea to talk to teenagers about credit before they get to 18 (when they could be offered a credit or store card). Explain when it’s a good idea to use credit, a bad idea to use credit and why it’s better to pay using cash than credit. Explain that using a credit card is borrowing money and like taking out a loan. Tell them that it’s a good idea to only use credit if they can afford to pay it off each month.