Skip Header

Federal Deposit
Insurance Corporation

Each depositor insured to at least $250,000 per insured bank

Home > Consumer Protection > Consumer News & Information > FDIC Consumer News

FDIC Consumer News

Fall 2012 - Tips for Parents and Caregivers

Audio (MP3 2.7mb)

Tips for Teaching Young People About Money

Here are ways that parents, guardians or even grandparents can teach money-management skills to youngsters.

  • Help children open their first bank accounts. Discuss how to comparison-shop by looking at key aspects, such as the minimum balance requirements and the interest rate, expressed as the Annual Percentage Yield (APY), at several local financial institutions, suggested Lekeshia Frasure, Acting Chief of the FDIC’s Outreach and Program Development Section. “Then guide your child in selecting and opening the right account for his or her needs,” she said.

    Many banks offer special savings accounts for students with features that may include a low minimum-balance requirement and certain fees waived.

  • Encourage young people to save money for future goals. Explain the importance of setting money aside for short-term and long-term goals. For a young adult or teen, short-term savings can include money for fun, such as concert tickets, as well as “emergency” savings for unforeseen expenses including car repairs. Suggest that your child put at least 10 percent of any gifts, allowance or earnings into savings, and consider making your own matching contributions as an incentive.

  • Consider giving an allowance…even to a young adult. The best systems encourage youngsters to decide in advance how much they should put into savings (which reinforces the concept of “pay yourself first,” before they are tempted to spend the money), how much should go into the spending pile and how much should be set aside to share with others (for charity, birthdays or holiday gifts).

    “An allowance can be one of the best ways to teach children about money management and the trade-offs we face in life, especially if you don’t give them more money if they run out of their allowance early,” said Irma Matias, an FDIC Community Affairs Specialist. Likewise, once your child is old enough, encourage him or her to get a part-time or summer job.

  • Try to set a good example with your own money management. For instance, keep track of your debit card, ATM and other account transactions, and discuss with your child why doing so will help you track your current balance and avoid costly overdraft fees.

  • Help your kids develop a healthy skepticism of unsolicited offers and inquiries. Young consumers are among the victims of scams and rip-offs, and even babies are targets for identity thieves wanting to use personal information to commit fraud. Information for parents on protecting children’s personal information from identity theft is at the Federal Trade Commission’s Web page on children’s privacy (

  • Talk with young people about money. “Use any opportunity to engage in a conversation about financial choices and decisions,” said Luke W. Reynolds, Acting Associate Director of the FDIC’s Division of Depositor and Consumer Protection. “For example, teach children how to critically analyze ads because special offers often are not the great deal they appear to be.”



Last Updated 6/10/2014

Skip Footer back to content