The prevalent use of debit cards and credit cards in today's society has allowed consumers to do away with cash as they fund their purchases.
So, in an era where many adults no longer use paper money, how do they go about teaching their children to understand and manage their finances?
Linda Miller, banking center manager and vice president of business development at WesBanco in McMechen, has worked with local schools for years to help young people learn to save and spend wisely. She said many youngsters need lessons in "basic life skills" to help them do a better job of it.
Cars line up at the drive-through at McDonald’s, located across from Union Local High School near Morristown. Each day, teens pack the restaurant after class, and they can pay for their purchases using cash, credit or debit cards. Bank officials say teens need to learn life skills to help them manage any of these forms of payment.
Photo by Jennifer Compston-Strough
Each April, the American Bankers Association sponsors "Teach Your Child to Save Day," and every October it offers "Get Smart About Credit Day." Miller uses those occasions - and others - to conduct programs at John Marshall and Bishop Donahue high schools and Center McMechen Elementary aimed at helping students learn to better manage their money. She teaches how to balance a checkbook and warns about the pitfalls of credit card debt.
"The grade school level is a good place to start, before they get in the habit of spending all their money immediately," she said. "You can teach them they can put a couple dollars in their savings account and still buy a toy."
Also at Center McMechen, Miller participates in a Bank at School program in which teachers' aides walk to the nearby bank with students. There, the children can make their own deposits.
Q: How can parents work with their children to help them learn money management?
A: One way is by allowing them to participate in school banking programs offered by a number of local banks. This allows youngsters to learn how to read a bank savings statement, learn the value of interest and also understand the importance of properly managing money.
"They can put as little as a quarter in, just to kind of get them in the habit," Miller noted. "They can have their (account) book marked. It gives them something to monitor."
First Choice America Community Federal Credit Union administers a similar program at Bethlehem Elementary School.
There, students can bring in their "banking money" each Tuesday, for which they are given a receipt. Each month, a bank statement is mailed to the student to show them how much money is in their account and how much interest has been earned. This gives parents the opportunity to sit down with their children and discuss how saving money can actually make them money.
Miller also noted that if young people - and adults, for that matter - are not financially literate, they can pile up credit card debt and instead of paying back $500, they can end up paying back $1,000 with interest. She said for many, the difference between credit cards and debit cards is not clear, and it is something everyone should learn to understand.
Miller said she has talked with school officials such as Marshall County Superintendent Fred Renzella about the need for financial literacy education in high school. She said teens need to learn how to handle a checking account, balance their ledger and use debit cards responsibly by recording every transaction. They also need to understand that all the credit card offers they will receive upon turning 18 can carry high interest rates and lead to long-term debt.
"They want it all, and they want it now," Miller said. "People want their children to have it better than they did and give them credit cards to use (especially when going away to college).
"I think it's important to educate them before graduation. Don't wait until the week before they go," she added. "If they don't understand how all works, it defeats the purpose."
Miller recommends that during the senior year financial life skills are part of the high school curriculum. For teens who get jobs, she believes using direct deposit can help prepare them for money management in the future. She also warned against the dangers of online spending. She suggested teens learn to use secure sites such as PayPal for transactions, as well as their bank's online banking options for paying bills and tracking their accounts.
Where financial education is not offered in school, Miller said parents can educate their children on their own. But she noted bank officials often will volunteer to speak to groups about loans, savings accounts, credit cards and the pitfalls of making only minimum payments. To contact Miller regarding such a presentation, call 304-232-5750, ext. 2230.