Talk to Your Kids About Money – Early and Often

in Your Life

Does this sound familiar? “Mom, I’ve run up a huge credit card bill.” Or, “Dad, I don’t have enough money for gas.” And then there’s, “Why can’t I get that toy? Everybody has one on the playground!” What can you do to prevent this behavior? Start talking and teaching your kids about money – and banking – as early as possible. And every chance you get.


One way to teach younger children about the value of money is by letting them earn an allowance. It can be a great opportunity to have an active, ongoing conversation with your child about money management. Usually around kindergarten or first grade, children start to grasp the concept that money is needed to pay for things. Follow these tips to make it easy and fair:

  1. Be consistent. Establish a payment schedule of monthly, bi-weekly or weekly.
  2. Use a formula for payment such as 50 cents or a dollar per year of age. This can also help curb sibling conflict by setting a standard and prevent requests for increasing allowances.
  3. Keep chores separate from allowance. Chores need to be seen as contributing to the family, regardless of any monetary reward.
  4. Teach your child to think ahead by putting money aside for savings and charity. Again, be consistent with minimum, regular contributions to these areas – such as 10% each for savings and charity or splitting everything a third – savings, charity and spending.

Before starting an allowance, however, make sure you see signs that your child thinks about how he or she would spend the money, or that these money lessons will stick.

Savings accounts

Some parents open savings accounts upon a birth of a child, while others funnel initial savings and cash gifts into 529 plans or education savings accounts (insert neon arrow here – First Internet Bank offers Coverdell Education Savings Accounts). Around first grade is a good time to start engaging with your child by opening his or her own savings account. Select an account with no maintenance fee and no average balance requirements, like the Tomorrow’s Tycoons account from First Internet Bank. Log in to online account management and perform basic banking tasks with your youngster, and then watch the money grow together to get your child excited about saving.

Checking accounts

Parents typically have to co-sign for checking accounts for minors so it’s best to make sure you’re comfortable with your teenager’s level of responsibility before opening an account and handing over a debit card. Coinciding with added funds and responsibility for your teen, a great time to open a checking account for your teen can be when he or she starts a part-time or summer job. Remind your child that a debit card isn’t “free money” and teach him or her to keep track of receipts and spending, and review expenses together on a regular basis. To get your teen started, review our checking options.

Credit cards

While credit card companies are not allowed to market directly to college students, the idea of a credit card still entices young adults with a new sense of independence. Students can rack up debt quickly and “worry about it later” (or, gasp, not realize or care that it needs to be paid back) without realizing it can greatly impact their credit scores for years to come.

Since many credit cards require a parent to co-sign, wait until you feel confident that your child is ready for that responsibility before turning him or her loose with that tempting plastic card. When you do open a credit card with your child, select a card with a low interest rate and no annual fee, and request a low limit. [Subtle reminder: Your student can earn 3% cash back on all gas purchases and 1% on everything else with a First Internet Bank Cashback credit card.] Lastly, if you decide to authorize your child as a user on your own existing credit card, make it clear that it’s for emergencies only.

By demonstrating smart, responsible financial behavior and keeping the lines of communication open about saving and spending, you’ll help prepare your children for the financial responsibilities and independence of adulthood. If you’d like to learn more or you’re ready to open any of the accounts mentioned above, contact one of our Relationship Bankers at or 1-888-873-3424.