National Bank of Mom Banking for Kids

Banking for Kids

In order to maximize savings and provide a good learning experience, I subscribe to a three-bank system. J has savings accounts at the National Bank of Mom, our local bank and an online bank.

Bank of Mom

The first stop for savings is the National Bank of Mom. J divides his money between his savings, spending and giving envelopes, and I pay interest monthly on the money in his savings envelope. He gets a statement printed and emailed to him, and he writes the interest in the register, keeping the account balanced. We make note of the increasing amount of interest each month, which will prepare us for a more in-depth conversation about compounding. Right now, our focus is on putting at least 10% of all money into savings and the idea that your money can make money.

Local Bank

Every few months, we take the cash from the savings envelope to our local bank. I think it’s important for him to go to a physical bank and deposit money. (So much happens electronically nowadays, and I think it can be difficult for kids to understand. This is why I pay his interest and allowance in cash, so that he can hold it in his hands and work with it.) The tellers are also very nice to him, which adds to his experience.

When looking for a bank, you might want to start with your own bank, but you could also look at other local banks or credit unions. Also important when choosing a bank:

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Practice Makes Perfect

Last month we started talking about percentages in the 10-10-80 savings plan with our focus on the 10% that goes to savings. I want J to save at least 10% of all money he receives, so we’re working on how to calculate 10% of any amount.

I showed him two ways to calculate 10% last time:

  • Use the 100-grid and divide the amount into 10 equal parts. $3.00 divided into 10 equal parts gives you 30 cents in each 10-block
  • Move the decimal one place to the left to find 10%. $3.00 becomes $.300 or 30 cents

J got a calculator for Christmas, so we integrated it into our practice. I showed him how to find the decimal equivalent of a percentage by moving the decimal point two places to the left (10% becomes .10). Continue Reading

Let’s Talk

If you haven’t guessed, I’m a little bit of a perfectionist.

A few weeks ago, I had what I thought was going to be tough conversation with J. Before that, I had stressed about it for weeks — what if he was upset at what I said? What if I didn’t express myself clearly or completely and he was confused? What if I looked like a bumbling idiot? What if it didn’t go perfectly?

The same set of fears manifests before each post I write. What if I can’t get across what I want to say properly? What if it’s confusing, boring, incomplete or worse? What if I sound completely ridiculous or like an amateur? What qualifies me to be able to write about these topics?

I have this idea of how things should be — how our conversations should go, what our relationship should look like, how this blog should read and on and on and on. I measure myself against an impossibly high standard, and I’m always scared of falling short.

Eventually I mustered up the courage to talk to him. I put aside my fears of not being perfect and took action. (I even managed to be calm during our discussion!)

And it couldn’t have gone better.

Because I was calm and talked about things in a friendly, yet matter-of-fact tone, he responded in kind. I set the tone.

Each time I do these things, I’m setting a precedent that our relationship is important to me. It’s one where we can talk about things — things that are difficult, things that are important, things that are on our minds, or even trivial things.

Those things also include talking about money.

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10-10-80 Savings Plan

Have you ever heard the following sage financial advice?

Pay yourself first
Live below your means
Save 10% of your income and live off the rest
Don’t spend more than you make

Books like The Richest Man in Babylon and Automatic Millionaire cover the topic right off the bat in detail, but you may have also heard the advice from family or friends.

When I was younger, my dad had me take half of any gift money I received and put it towards a savings bond. We would go to the bank and fill out the paperwork, and I still have a stack of bonds to this day.

My aunt would also tell me to make sure I saved 10% of anything I was given (with instructions to also give 10% to the church).

National Bank of Mom Save 10 Percent

We’ve been using the envelopes for six months now, and so far I haven’t said much on how J should distribute any new money between them (although I might gently push towards making sure some money goes to savings). He hasn’t learned about percentages yet in school (he’s still on multiplication and division). A quick Google search says he might not learn them until 6th grade!? That’s not going to work. I’m going to have to start sooner.

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National Bank of Mom Short Term Savings Plan

Short-Term Savings Plan

When we first started learning to manage money, we had three envelopes — one for savings, one for spending and one for giving. The savings envelope was for long-term savings — I give J a monthly statement and interest (more on this later). What I didn’t account for, however, was short-term savings — things that he wanted to buy but didn’t immediately have enough money. He’d have to save up.

It was October at the time, and with Christmas coming, we thought it would be perfect to save for Christmas presents.

  • We got a new envelope
  • We made a list of everyone he wanted to buy for, approximately how much he wanted to spend on each person and added to get a total needed
  • We then decided on when he’d like to save the money by (two weeks before Christmas) so that we had time to shop and wrap the presents
  • From there we could calculate how much he had to save per period to meet his goal

In addition to the register, I made a small worksheet that we filled out with the above info.

National Bank of Mom Savings Plan

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