One of the most important things you can teach your children about managing money is to balance their checkbook. It is a common misconception that you can simply find out your balance by calling the bank and finding out how much is in your account. They can tell you that, but items may not have cleared, and so you do not have a clear picture of what money you actually have available to you. You can teach your children to balance their account in five easy steps.
1) First you need to teach them to write don or track all purchases that they make from their checking account. This includes checks, debit card charges, automatic payments and ATM withdrawals.
2) Second teach them to keep a running balance while tracking deposits and expenditures. This should let them know where they are throughout the month.
3) Teach your children to balance to their statements. This involves checking off each item that has cleared, and then subtracting out the ones that haven’t cleared from the ending balance of the statement. The result should match what is currently in the ledger. Most statements come with a worksheet that outlines this process. You can also money software, which completes many of these steps for you.
4) Teach them how to look for errors when the balances do not match. If it is a certain amount they may want to look for a transaction that matches that amount. If it is a large amount they may want to look for any transaction over that amount. Once we were a thousand dollars off because I transposed two numbers. They should also double-check their addition and subtraction. It may be their fault or the bank’s fault, but it is essential that they figure out what caused the problem so they can correct it. If it is a bank error, then they need to be polite as they call the bank and explain the problem, this will lead to the issue being resolved much quicker.
5) It is important that your children not assume that the debit card will not go through if they don’t have enough money to cover the account. Debit cards can take up to two weeks to process through the account, and so not all charges may have cleared at one time. You may be allowed to withdraw more money through the ATM as well, because not everything has cleared your account yet.
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