Tamalpais Bank’s efforts to teach kids about money will pay dividends down the line.
There are certain subjects parents dread talking about with their children. Sex. Drugs. Alcohol. Smoking. Money. Wait…what was that last one again?
Money. There, I said it. I don’t know how to talk to my kids about money—and apparently, I’m not alone. “Many young people graduate without a basic understanding of money and money management, business, the economy and investing,” reads an opening quote at MoneyInstructor.com, while a 2005 article from Forbes magazine cautions, “Teaching kids how to manage money is one of the biggest challenges facing any parent.”
The problem is, talking about money has become something of a cultural taboo here in America. It seems intrusive—even voyeuristic—to speculate about what your neighbors (and even your co-workers) are earning…let alone how they’re spending it. The result is that we all keep it close. With that mind-set, it’s no wonder we feel uncomfortable bringing our kids into the discussion. I mean, who knows what those little blabbermouths will tell their friends (whose parents are, likely, your friends and co-workers)?
Yet the general consensus is that teaching money skills to children—and starting even before they begin kindergarten—could be the key to a life of financial stability. So what’s it going to be: a maxed-out credit card before their first college midterms, or a bit of well-timed honesty about why that particular toy won’t be coming home from the store today?
Can it really be that simple? The general consensus among financial professionals is, yes it can. According to MoneyInstructor.com, it’s never too early to learn about the value of money and how to budget and save; the earlier you can teach children about earning interest versus paying it, the better prepared they’ll be to manage their own money.
Stephanie Reichel of Ross agrees. Her daughter, 7-year-old Katarina, is a budding entrepreneur with a lemonade stand, her own savings account and dreams of one day opening her own bakery. Katarina and her younger sister, Gabrielle, 3, each have their own savings account at the nearby Tamalpais Bank. “When I wanted to open an account for Katarina, I did some research,” says Stephanie. “I wanted a bank that was local enough to walk or bike to while she was still young, and I was really impressed with Tam Bank’s kids’ program.”
Based on incentives, Tamalpais Bank’s kids’ savings accounts (designed for children ages 12 and under) reward thrifty behavior with “Tam Bucks,” which are earned with each deposit and can be saved and redeemed for a variety of prizes, from stickers and coloring books (five Tam Bucks) to backpacks (50 Tam Bucks) and even a $25 gift card (100 Tam Bucks). The accounts earn interest at the same rate as the bank’s regular savings account for adults. “She completely gets it,” says Stephanie of Katarina. “She loves math and figures things out quickly—she even understands compound interest!”
An interesting idea
“As a bank and as a business, you try to differentiate yourself,” says Tamalpais Bank First Vice President/ Director of Marketing Mark Chapman. “Tamalpais Bank was really founded on the idea of community, and at each of our branches, we have what’s called the ‘KidZone.’ It’s kind of neat—each day on my way to lunch, I go by there, and there’s always a child or two. I get to watch 4-year-olds zip around on the computers, playing the games and doing the activities we’ve set up.”
Tamalpais Bank has an organized internal structure of “quality improvement teams,” or “QITs,” which are made up of employees who meet voluntarily and discuss ways to improve such functions as customer service, community outreach, environmental impact and even employee interaction. One QIT suggested expanding the bank’s existing savings growth account for children to make it more appealing for youngsters to save money. The Tam Bucks concept was designed, Chapman explains, to “incent children to begin saving, help them learn about savings and to encourage them to continue to be savers.”
Since upgrading to Tam Bucks, the number of new kids’ savings accounts has increased by 60 percent. And as the savings program was being researched and redesigned, the QIT began evaluating the bank’s other youth programs (including scholarships), ultimately suggesting the bank develop a full-fledged financial literacy program.
Getting practical
“Practical Money Skills for Life,” launched in spring 2007, has met with praise for its clear and comprehensive approach. It was developed is conjunction with a company that specializes in business and financial education, with input from several professional educators. And it goes far beyond a simple banker-in-the-classroom-for-an-hour presentation.
The program has both a home and a school component, and is separated into multiple age-appropriate lessons, beginning with young children (preschool to second grade) and continuing through children (grades 3 to 6), teens (grades 7 to 12) and college (ages 18 and up). Topics become more advanced as the age level rises, from “What Is Money?” and “Making Spending Decisions” for the preschoolers to “Living on Your Own,” “The Art of Budgeting” and “About Credit” for those about to become independent.
These are much-needed lessons, no matter what a child’s age or a family’s monetary circumstances. Consider the staggering statistic that, according to totalbankruptcy.com, people in their early 20s—many of them college students—are among the fastest growing group of bankruptcy filers in the United States. Why? Two words: credit cards.
“My daughter was preparing for college, and as soon as she got done with her SATs, she started getting unsolicited credit card offers in the mail,” says Chapman. “That’s a little scary. I needed to sit her down and employ some of the money skills lessons to explain to her that, ‘This is real money.’”
Real money
“Schools traditionally bring in a firefighter to talk about fire safety and a police officer to talk about laws and authority. But as far as I can tell, nobody’s ever brought in someone to talk about money,” says Chapman. “And yet, money is one of those things that, when you talk to kids, they just don’t know anything. They have no sense of it.”
Combine that widespread naiveté with the deep pockets of Marin County, and you have the building blocks for disaster. “This is a high-risk area for financial problems,” asserts Stephanie Reichel. “There’s a lot of money around, and kids are getting what they want without a concept of earning or saving. That can be dangerous in the future: How will they function if they can’t balance a checkbook, budget or understand investing and interest?
“They think a piece of plastic gets them what they want, but they don’t understand that piece of plastic represents real money. Look at all the kids who get to college and are inundated with credit card offers. They have no job, no assets and no understanding that they could seriously damage their future chances of owning a home or buying a car. These lessons should be taught early—I wish someone had told me about this stuff when I was younger!”
Start young
“Marin County is considered a very affluent county,” agrees Chapman. “But when we asked the education community, ‘Is there a need?’ before we launched this program, every one of them said, ‘Absolutely.’ They all said, in effect, ‘We’re not getting this.’
“And since the launch, when parents have come in with various field trips, we’ve had nothing but positive feedback: ‘Thank you for doing this.’ ‘This has been so helpful to me.’ ‘I don’t really know how to talk about these things with my children…’ It kind of sounds like a few other subjects I can think of. We obviously struck a chord.”
Christine Sagastume of San Rafael first encountered Tam Bank’s Practical Money Skills program when she chaperoned son Giancarlo’s kindergarten class field trip to the bank’s San Rafael headquarters last spring. “It was great,” she says. “They had tables set up for the kids with 50 pennies and a coin roller, a plastic piggy bank and Tam Bucks. I think they also had various coins that added up to $1 at each table.
“They gave a child-appropriate presentation. Very simply, they talked about saving pennies in your piggy bank until you have enough to roll up and take to the big bank, where they can earn Tam Bucks, which they can trade in for small toys or stickers. As soon as we got home, my son wanted to roll all his pennies and take them back to the bank! I think it was a good early lesson about how money grows.”
The Practical Money Skills information is available either as a printed teacher’s guide—provided gratis to interested Marin County schools and complete with lesson plans, talking points, classroom handouts, overhead displays and homework suggestions—or online for parents interested in tackling the subject at home (regardless of whether they’re Tamalpais Bank customers). “The parents’ version has the same material, but it’s worded more conversationally,” says Chapman. “The parent’s section [of the website] also gives links for more references.”
Stephanie Reichel and her husband used the parents’ site when discussing an appropriate allowance for Katarina—specifically, the “then and now” calculator, which translates allowances of yore to dollars of today. “It was an eye-opener to see what the comparisons were,” she says.
Beyond setting the amount, though, the site helped guide the family’s discussion about what an allowance is and how it’s to be distributed. “It helped us set the ground rules very clearly,” says Reichel. “She has certain jobs and, if she does them, she gets some money. If she doesn’t do them, she doesn’t get her allowance.”
The Sagastume children (6-year-old Giancarlo and his siblings, Vincenzo, 8, and Francesca, 4) also receive allowances and, though they bank elsewhere, each have their own savings account. Christine explains, “We have an understanding that, at mom and dad’s discretion, they can spend their allowance on what they want. But my 8-year-old is already saving—he says it’s for a car when he turns 16. He recently told his dad he didn’t want to go to the baseball card store every week. He wants to save some of his money for other things. We both felt good about that.
“It’s great to get these good habits started at a younger age,” she continues. “A lot of children have no concept about what things cost or where money comes from—they think it’s just an endless supply from Mom and Dad.
“I don’t want my kids to be the ones who are in debt in college because they didn’t know about money and credit cards, or because they don’t understand why they can’t have the things they want instantly. I want them to understand the connection between saving for something and getting what they want.”
As parents and grandparents, and as educators (both formal and informal), it’s the duty of all concerned adults to guide children to become successful adults. One of the hardest (but, perhaps, most important) lessons to impart is the correlation between work and reward. So in the same way we guide them through career decisions and support them through relationship choices, a steady and honest hand on the family purse strings may well be a key to their satisfied life.
