From a very young age, children become aware of the financial transactions and lingo adults use. However, they may not fully grasp the entire picture. That’s where you come in! Our credit counseling advice is to start educating your child about financial literacy sooner rather than later. Teaching your child some basic banking terms will help prepare them for their own financial journey.
Teaching Kids About Money
First, read through this list of basic banking terms to remind yourself of what kids may or may not know. The information below is more of the idea behind it- not a strict definition. Sometimes it’s better to paint a picture for a child rather than a standard dictionary definition. Read the terms below and add your own experience (don’t forget to check out our other resources for teaching kids about money)!
List of Basic Banking Terms for Kids
- Bank- a business that keeps your money safe for you.
- Checking Account- the specific place at the bank where your money is kept. You take money out of this account using checks or a debit card for everyday transactions.
- Savings Account- a separate account for your money that you want to grow and grow- not take from. This money is not for everyday use, but it is to save over a long period of time.
- CD Account- A CD account or Certificate of Deposit is similar to a savings account. However, you cannot take your money out until the time is up. Plus, you earn interest on the amount deposited.
- Credit- the ability to borrow money.
- Debit- money taken directly from your checking account.
- Interest- an amount charged or earned. If you take out a loan from the bank, you have to pay interest to do so. If you let the bank use your money that is in savings, like a CD account, the bank pays you interest. This is a tricky one!
- Principal- the amount of money borrowed.
- Balance- the amount of money owed on a bill.
- Mortgage- a loan to buy real estate.
- Rent- money you pay to borrow something- like a place to live or a car for a trip.
- ATM- Automated teller machine allows you to get money from your checking or savings accounts without talking to an actual bank teller.
If you’re struggling to pay off debt, schedule a free credit counseling session with us today.