Once your kids are old enough to write, you may want to consider the idea of opening up a local parent bank. What is a parent bank you say? Well, it is a fun and informative way to teach kids about money and the banking process, as well as curbing the “impulse buy.”
Often kids feel money just burns a hole in their pockets. When the day comes they finally get some, they can’t wait to get out and spend. It doesn’t really even matter what they are buying, they just want to spend. Sound familiar? This is a common problem for many families, especially as allowances begin to be introduced.
Instead of simply handing your children cash as an allowance each week, one technique is to create a parent bank. This concept works best for kids who are old enough to write comfortably, usually around 2nd grade and older. Judge it based on your own child’s maturity, more than age.
The concept is to hold your children’s money for them and they can write you mock checks for a set amount. The process takes some of the thrill of the cash away and encourages them to think through their spending. You can even generate a “check” on your computer, print some up, and use a blank checkbook for them to keep track of their spending. It is also a great way to build math skills while learning some important adult processes. Most kids love the idea of feeling grown up with their own checks and checkbook.
Then, when your kids find something they want to buy, they will need to calculate the cost of the item or items, deduct it from their “bank” account, and write you a check for the cash. You then, in turn, will pay them a set amount of money for each item they buy. It is also a unique way to keep tabs on what your kids are buying and create conversations around spending habits. Of course in this process it is important to still give your kids some freedom so they do learn valuable money management skills through trial and error. This is critical at a time when their money is not needed for necessities, like it will be when they are adults.