Teaching Kids About Using Checks
After a child understands about coins and bills, it's time to explore other ways to pay for things. As an adult, you know that cash isn't necessarily king, as the saying goes. It's not a good idea to send cash through the mail or to carry a lot of cash when shopping, so other methods of payments should be used. One method is to pay by personal check.
A check isn't only a mark that's made when an assignment has been handed in or a task completed—it's also a piece of paper that represents money. A personal check works like cash. As you know, you give it to someone to whom you owe money. That person can turn your check into cash or use it just like money. A check is like a promise to the person you're giving it to that the amount you've written on the check is backed up by money in a checking account.
A checking account is a type of bank account. Checking accounts aren't investment accounts because you generally don't earn any interest on the money you keep in the account. Depending on the type of checking account, you may have to keep a certain amount of money there (called your balance). The balance generally is figured on a monthly basis and is called a minimum monthly balance. That balance on average during the month can't dip below a set amount (such as $100 or $1,000). If it does, you'll be charged a fee.
Financial Building Blocks
Personal checks aren't the only checks around: Money orders can be used just like checks. A money order is a check that's bought from the post office or a commercial business (such as a supermarket or a check-cashing store) in the amount needed. (Money orders from the post office are called postal money orders.) In any case, there's a small fee for each money order.
A check is proof that you've paid for something. A check is readily accepted as payment by most places and should be used instead of cash when sending payment by mail.
Younger children don't have any need for a checking account. They should know what a checking account is and what it's used for, but they don't need one of their own. However, once a teenager starts to earn money or goes off to college, it may be helpful to have a checking account to pay school telephone bills and other expenses. When your child is in high school, it becomes necessary for her to learn how to write a check, keep tabs on the account, and balance the checkbook.
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Excerpted from The Complete Idiot's Guide to Money-Smart Kids © 1999 by Barbara Weltman. All rights reserved including the right of reproduction in whole or in part in any form. Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.
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