Piggy bank stage is the ideal time to teach money management

February 18, 2005|by Lisa Tedrick Prejean

My 6-year-old recently brought me her piggy bank and told me it was full.

"I don't need anymore money, Mommy."

Part of me wanted to say, "That's right, honey. You're set until you turn 18. Then you can get a job if you need more money."

But the teacher in me saw this as an opportunity to instruct my daughter about money and banking procedures.

"Well, dear, it's time for us to make another deposit in your savings account," I said, carefully turning her piggy bank over so I could take out the stopper and remove her coins.

She quickly put her hand over mine and said, "But Mommy, I don't want to give my money to the bank because they don't give it back."


It was then I realized that we've made deposits in her savings account since she was about 6 weeks old but we've never made a withdrawal. She's never seen the money "come back" to her.

"Oh, but honey, your money is there if you need it, and it's been earning you interest all this time. That's like getting more money than you already had."

She hung her head and quietly said, "But I won't get this money back. I'll get some other money back."

I wanted to say that it really doesn't matter. Money is money. But how do you tell that to a kindergartner?

"Well, honey, if there are some special coins that you want to keep, we can do that."

That helped her countenance a tad, but I could tell she wasn't totally convinced.

Trying to explain banking procedures to a child can be challenging, says Steve Hummel, vice president, branch administration, for Hagerstown Trust Co.

Hummel suggests explaining things on the child's level. If you borrow something - a bicycle perhaps - from a friend, you return it in better condition than it was when you borrowed it. You wash the bike, tighten the chains, put air in the tires. That's what a bank does with your money. Your money is better when you get it back because there is more of it.

When you put money in a bank, you are not only benefiting yourself. You're also benefiting your community because you're making that money available for other people to use.

By placing your money in a savings account, you could help somebody who wants to borrow money to start a business. This can create jobs for your community.

Hagerstown Trust has a program at several area elementary schools where children can make deposits in savings accounts. Older students serve as tellers and have to balance their tills at the end of the banking sessions.

Hummel says when school groups take tours of the bank, the children always want to know where the money is kept. When they are taken into an empty vault, they react with surprise that their money doesn't just sit at the bank. It is "sold" to other people who want to use it.

"Banks are in the business of buying and selling money," Hummel says. "We 'buy' it from people who want to save money. We 'sell' it to people who want to borrow it."

Banks make money because they charge more to the people who borrow than they pay to the people who save.

Hummel says he wishes every child would be taught the basics of budgeting and finance and the dangers of abusing credit. We shouldn't wait until they're 17 and being offered a $500 credit limit on their first credit card.

It's much easier to start teaching them at the piggy-bank stage.

For more information on banking procedures, check out the American Bankers Association Web site at

Lisa Tedrick Prejean writes a weekly column for The Herald-Mail's Family page. Send e-mail to her at

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