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my 10-y-o son asked me how checks work

Posted by talley_sue_nyc (My Page) on
Thu, May 15, 08 at 10:04

Lots of "how banking works" lessons lately.

His sister and he both got some checks for gifts recently (thank-you notes written or about-to-be), so I had them endorse the checks, and I took them to the bank.

So last night, during the bedtime routine, he asked. I tried to explain it--it's a note from me to my bank that says, "pay Grant this much money out of my account" (w/ an explanation about how the bank keeps track of my account but doesn't actually use the same dollar bills)

It made me remember when his sister, at the age of 4, said, "I have a $100 bill! It's at the bank. I could go get it and show it to you someday." She thought there was a box there w/ all her cash--the same exact bills. I waited a couple of years before I explained to her that the actual bill had left the building; her "account" was simply numbers on a piece of paper.


How did you teach your kids--or how did you learn--about checks, banks, etc?

What's the best misconception you heard a kid say?


Follow-Up Postings:

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RE: my 10-y-o son asked me how checks work

misconception...

One day, my son (age 6 at the time) asked for something, and I told him we did not have the money for it. He insisted we did.

He asked to see my checkbook, and when I gave it to him, he said, "See, Mommy, you have lots of checks left!"

We had to have the talk that 'number of checks' in checkbook does NOT indicate 'amount of money' to spend!


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RE: my 10-y-o son asked me how checks work

My DD said, when I told her we didn't have enough money, "well, go to the money machine and get some!"

She was about 5, I think.


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RE: my 10-y-o son asked me how checks work

Credit unions have a national program to teach financial literacy to youth through their national association known as CUNA. Here's some info...

Call your local credit union & ask about classes and/or teaching materials that are age appropriate.

/tricia

Here is a link that might be useful: Credit Union Financial Literacy


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RE: my 10-y-o son asked me how checks work

I used to work as a writer/editor at Navy Federal Credit Union in their marketing department. I was responsible for creating a LOT of consumer education materials, including some directed at children.

Unfortunately, though, at the time I was there the retired Admiral in Charge (he had commanded John Paul Jones in the American Revolution) wanted virtually NOTHING to do with educating children on sound fiscal practices.

I think his mindset was still stuck in the '50s... the 1350s... in that kids didn't begin to consume financial services until their late teens at the earliest, so why bother?

Now that he's been placed in mothballs, there's a true progressive leading the organization and they are focusing a lot more on kids, which is a smart move. Kids control a lot of wealth, and if you get them early, you'll likely keep them as members for the bulk of their lives.

I only lasted 3.5 years in that job. Low pay, virtually no respect from the incredible, layered bureaucracy comprising mostly retired stars, and territory wars that would put the Isralies and Palestinians to shame.

But, I still use them as my primary financial institution. :-)


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RE: my 10-y-o son asked me how checks work

Sorry ... I don't remember any money-related stories from when my kids were small.

k19 ... that they didn't frame,

They let you in the door, do they?

ole joyful

P.S. I told a story around here somewhere a while ago of one way to help a kid learn the value of money ... not quite sure of where to go looking for it.

I think that I have it on paper at home, so that'll show me on which forum and at about which date to go looking - it was longer ago than messages stay alive on KT, but it wasn't there, I think.

Along the line that everyone from toddler on up has his/her own business. If your dad/mom, as employee, doesn't get paid (or if they, employer, don't pay staff) ... the workers don't stay around long.

But in their business, they have employees.

But - oh, joy! - they don't have to pay their employees ... in fact, most of the time, their employees will pay them!

At this point, having quietly taken my change purse from my pocket, I pull out a Loonie (Canadian One Dollar coin - and what country in its right mind would have a basic coin called a "Loonie"??) (there's a loon swimming engraved on the back) ...

.. show it to them and tell them that Loonie is one of my employees (and no one has accused me of being "loonie" yet).

As it is an employer's job to make his employees work effectively, so that's the kid's job with his/her Loonie/employees.

If they use the employee to buy ice cream ... the ice cream tastes great ... but the employee stays in the ice cream store.

If they put the employee to work, it'll bring in nickels and dimes, that eventually grow into another loonie like themselves.

Which means that you now have 2 loonies ... your employee went to work ...and paid you, right?

o j


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RE: my 10-y-o son asked me how checks work

I can remember only one - and it's not always kids; sometimes it's the adults.

I was in a bank line behind a distraught (actually beligerent and out of control) woman and her son of about six. He'd been given 5 silver dollars by his grandfather and opened a little account with them. Now wanting to make a withdrawal, he started to wail when the teller handed him 5 bills. The mother started to wail too.

This was an accommodating bank, one of the officers escorted them to his office - probably tried explaining what happens to deposits - while the other tellers found 5 silver dollars to make an exchange. (And to get them the heck out of the bank!)


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RE: my 10-y-o son asked me how checks work

"They let you in the door, do they?"

I make MAYBE 2 visits to the physical office a year.

Everything else is done on line and via ATM.


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RE: my 10-y-o son asked me how checks work

I have a really rather sad but true story.

A friend co-signed (never again) a loan for a close (20 year old ) family member who had an emergency, no established credit, and no one else to turn to. It was for $X,ooo for 3 years. After having paid on it for 2 years, she (the borrower) asked my friend if he know the total of all the payments equaled almost $1000.00 more than the initial amount borrowed. She was just amazed that it cost that much money (interest)to borrow money. No one had ever set down with her and explained interest charged on a loan, though I'm sure it was all there in plain English on the papers she signed (probably) without ever reading. She was never taught about saving ...or 'employees' as OJ calls it, and savings interest.

How could this simple common knowledge (one would think) not be known by a young adult who had been to college for 1 1/2 years? Just what are children and young adults being taught in todays schools, if they are not learning financial basics, something very important for them to make it down the road of life? To me, is is just as important as teaching proper nutrition and exercise.

Sue


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RE: my 10-y-o son asked me how checks work

"Just what are children and young adults being taught in todays schools, if they are not learning financial basics, something very important for them to make it down the road of life? To me, is is just as important as teaching proper nutrition and exercise."

I agree. I'm glad my high school offered courses in General Business as well as Singles Survival. We learned how to write checks, set up utilites, find a roommate, etc. It was very useful. Especially since I moved out on my own at 18.

I don't see how any young person can be prepared to live on their own without having basic money management skills.

A long time ago I read a book (can't recall the name) about a husband and wife who had two young sons. They were always badgering their parents for money. Instead of giving them an allowance, they gave them a 'salary' instead. This amount was determined by their ages.

The parents provided the essentials: food, clothing, etc, but any extras were taken from the salary.

They received this money once a month. They were required to immediately put 1/3 in the bank, tithe 1/3 to their church and could do as they liked with the remainder.

The first couple of months they blew their money within a few days on candy, video games, etc. They quickly learned that when this money ran out there wouldn't be any more $ until the following month. They learned to stop nagging their parents for money and paid better attention to what they could afford.

By the time both boys were 16, they were able to purchase their own cars.

There is a book I've seen called "Raising Money Smart Kids: What They Need to Know about Money and How to Tell Them (Kiplinger's Personal Finance) (Paperback)-by Janet Bodnar

The author, Janet Bodnar, a mother of three and deputy editor of Kiplinger's Personal Finance, has experienced firsthand the increased spending power and financial temptations facing today's children.

Using real-life examples from her ""Money Smart Kids"" column she has written for more than a decade, Bodnar offers creative cures for the grocery-cart ""gimmies,"" plus guidance on how to set up a simple allowance system that works, help kids learn the virtues of working for pay, and how to turn kids onto saving and investing.

I haven't read it, but it looks like it might be interesting.


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RE: my 10-y-o son asked me how checks work

My late mother taught me to balance her checkbook when I was about twelve; I did it for several months. It was a good 'how to' as well as a close-up look at managing money.

I have a good sense of direction. My mother had me lead her to various departments within Marshall Field's department store in Chicago. (Two buildings covering a whole block; nine floors as I recall.) I was also the 'navigator' on car trips.


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RE: my 10-y-o son asked me how checks work

My friend took her 2 year old son with her to an ATM and withdrew some cash. For days after, he told people "Mommy got money out of a wall."


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RE: my 10-y-o son asked me how checks work

About a month or so ago, I came home from work to be pounced on my 14-y-o DD (8th grade) who said, "Mom, can we NEVER borrow money to buy a TV or anything?"

I'm thinking, WHAT?

They'd done an exercise in math class in which this guy goes to buy a big-screen TV for $1,400. The store talks him into buying it on credit, in order to get a $50 discount, and he pays the minimum, nothing more, for 5 years. When he's done, he has paid something like $3,000 for the TV (I don't remember all the numbers, but it was really dramatic). It made a HUGE impact on her; she still brings it up now and then.

So we talked a bit about borrowing money, and when to do it, and how to pay it off, etc.

***
They also taught them about compounding interest, but I think they used a way-dramatic and unrealistic interest rate (like, 12% or something). But it got her thinking.

*****

And when he was about 4, my son told me "When I grow up, I'm afraid I'm going to have to sleep on the street."

Again, WHAT?!
(how many times don't kids make you say that!)

"You told me that you and daddy have to pay money to live in our apartment" (we own our apt, but we'd recently explained maintenance and mortgages to them)

"And I don't have any money."

So I had to explain a JOB to him.

AND I told him that, should he lose his job, or have trouble getting his first job, that he could probably live with me & dad for a little while, and maybe he could stay with another family member, but just for a little while. (trying to strike a balance between making a 4-y-o feel safe, and setting the stage for him to think other people have to take care of him)


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RE: my 10-y-o son asked me how checks work

TallySue--many banks have educational materials available for teaching children about money/banking. Often including fake checks for them to be able to practice writing.

At your son's age, he's certainly old enough to understand the basic concepts. You may also want to ask at your bank to find out what special programs they offer to young children (some have special accounts, with lower fees/penalties for example). As long as he's expressed interest, seems the time is right for you to help him open up and learn about his own checking account. Or perhaps a Money Market account that combines both savings and checking.

Nice to hear a child so interested in learning about how to be a responsible adult.


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RE: my 10-y-o son asked me how checks work

How about a tour of the Federal Reserve in NYC? You can arrange a guided tour through the Federal Reserve system at most locations. You might even suggest to his school, scout troop, etc. arrange a tour for the class as a field trip.

Our local fed here does an exceptional job showing children the basics of banking on such tours. Parents attending often learn things they didn't know either. :)


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RE: my 10-y-o son asked me how checks work

I just saw this: tithe 1/3 to their church

That's an oxymoron! "tithe" means 10%!


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my kids and their accounts

It probably is time to shift DD over to a checking account (they both have passbook savings). She's 14; people have started writing her checks as gifts (instead of giving her cash). And she's likely to want to mail-order stuff, or need to pay for fencing lessons.

Right now I'm wrestling w/ the question of whether they can spend their "10% for savings"--I think they'll be more likely to save if they can see that it's possible to DO something with that. But I also don't want them to just piddle it away.

The theory right now is that they can spend their savings on bigger-ticket items (a week at camp; a Nintendo DS; fencing lessons) if mom & dad approve the item. Less control, so maybe not good. but I figure, our decisions will be part of what shapes their own values.


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RE: my 10-y-o son asked me how checks work

talley_sue_nyc "I just saw this: tithe 1/3 to their church That's an oxymoron! "tithe" means 10%!

How observant!

Perhaps the following phrases might also be useful in helping educate your children:

"Separate the wheat from the chaff"-Distinguish the wanted from the unwanted, the valuable from the relatively valueless.

"Throw the baby out with the bath water"-If you get rid of useful things when discarding inessential things, you throw the baby out with the bath water.


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RE: my 10-y-o son asked me how checks work

A local guy who wrote a book called, "Financial Freedom Without Sacrifice" has expressed substantial sadness that our children get so little training about money management in school ... and I have spoken in a number of places at different times along the same line.

One of the chapters in his book refers to "How to make 35% on your money ... guaranteed". You've heard the same story from me here, several times ... the qualifying amount is limited to the amount that you owe on store-issued credit cards, which usually charge 25 - 28% on unpaid balances. Which most folks must pay with after-tax money, as such purchases aren't deductible, so one must earn 35% before-tax income, if income tax rate is 20%, pay 7% to the Income Tax people, to leave 28% left to pay the credit card balance.

One of his suggestions was to check around among our friends regarding insurance coverage and their experience with various compnies' service. He suggested that one check with various companies from time to time, finding out current coverages and rates, in the light of what their own and their acquaintances' experiences had been.

Learning how money (and taxes) works - an interesting hobby, that pays well!

ole joyful


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RE: my 10-y-o son asked me how checks work

-If you get rid of useful things when discarding inessential things, you throw the baby out with the bath water.

No, you don't; you end up w/ more room in the closet!

Believe you me, i don't have to tech them to hold on to stuff, or to be cautious about what they throw away (both literal and metaphorical). A much more important lesson to teach MY kids is that is is OK to throw out both the baby AND the bathwater. Or perhaps, to teach them that nearly every single thing in their lives IS bathwater, and very, very little is "baby."


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RE: my 10-y-o son asked me how checks work

"The theory right now is that they can spend their savings on bigger-ticket items (a week at camp; a Nintendo DS; fencing lessons) if mom & dad approve the item. Less control, so maybe not good. but I figure, our decisions will be part of what shapes their own values."

I vote for fencing lessons. They would seem more useful for kids whose parents are teaching them that its OK to criticize others when they are trying to be helpful.


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RE: my 10-y-o son asked me how checks work

I remember when my son was about 2 or 3 years old, we were at the ATM to withdraw money. When the machine dispensed the cash, my son screamed "You won, mommy! You won!" The guy behind us couldn't stop laughing:)


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