Teaching Children About Banking

Elementary students can learn how banks operate and the types of services they provide. Academic lessons enable you to introduce concepts such as saving, budgeting and investing. Some students get an allowance or they receive money on birthdays and holidays, so it's never too early to start teaching them about simple banking concepts. As a teacher, you might tie banking topics to your math lessons on counting money and making change, or to your social studies lessons on careers.

Explain to kindergarten and first graders that banks are places where people, such as their parents and grandparents, can safely store money. Bankers help people organize their funds into accounts, so they have access to money they've earned as they need it. Discuss how it wouldn't be practical or safe for people to store large amounts of cash at home. Banks have high tech, professional security systems and security guards to safeguard people's money. Create a flow chart on your blackboard or white board, and show students how people earn money, get paychecks, deposit checks at banks and withdraw funds, as needed, to pay bills and other expenses.

Discuss with your students grades two through six how checking and savings accounts work, including the differences between the two. Explain that children can get savings accounts with a parent's permission and signature, although children don't usually open checking accounts until they get their first job or when they go to college. Introduce banking terms such as deposit slips, bank tellers, automated teller machines, checks and electronic banking. Create templates of faux deposit slips and checks with made-up account numbers and have your students practice filling them out. Explain the importance of routing numbers, account numbers and the check number on bank deposit slips and on checks. Talk about that many people do their banking online, using automated employer-issued deposits, and that they have scheduled withdrawals that pay bills and software that balances checking accounts.

Introduce concepts related to credit accounts and loans in third through sixth grade. Mention that many people don't have enough money in a lump sum to buy a house, a car and other high-cost items, so banks allow them to get loans or mortgages, which spreads out the cost over time. Discuss the pitfalls to credit cards and loans such as high fees, high interest rates and penalties for late payments. Explain that it's normal for banks to make money by charging interest and fees for these services, but consumers need to research the financial terms before they agree to the loan. Present an example to your class that shows the total cost of a $20,000, five-year car loan with a three percent interest rate versus a 10 percent interest rate. You can do the same illustration with a 30-year mortgage with differing interest rates.

Explain to third- through sixth-graders that they can earn money by banking. Mention that some bank accounts, such as savings, college-tuition, Christmas and retirement accounts, earn interest as long as the money stays in the account for the required amount of time. Banks use the money that's stored long-term to fund their own expenditures. Make a chart on the board that shows approximately how much money a student might earn if she put $100 in a Christmas or a savings account for one year. Even though it might not seem like a lot of money, it's free money that they didn't have to work to earn.