How to Explain the Credit Union System of Saving & Borrowing to Children
- 1). Use the simple act of putting money into a piggy bank (other animals work, too) to begin teaching your child about saving and borrowing from credit unions. Every day, give your child a few pennies to put into the bank. Next time you visit a store and your child clamors for a toy, explain that you'll have to look in the piggy bank to see if there's enough in there to buy it. Reinforce the message over time by introducing a small weekly allowance to keep the conversation going.
- 2). Visit a bank and a credit union with your child. Explain the similarities between the two: tellers, vaults, deposit slips, withdrawal slips, security guards and bank officers. Next, point out consumers who are doing business with both financial institutions, calling patrons by their proper names: customer or member. Tell your child that your job allows you to become a member so you can go to the credit union to save and borrow money.
- 3). Use photographs or house model to add a borrowing lesson to your curriculum. A Monopoly game works well because it has the right mix of game pieces and symbols. Give your child a house. Ask her how she plans to pay for it. If you've done your job, she will likely direct you to her piggy bank. Explain that she will need more than funds in her piggy bank to buy a house; tell her that lots of credit union members put their piggy bank money into credit union savings accounts, and as a member, she can borrow some of their money to help pay for her house.
- 4). Return to the credit union with your child. Point out members putting money into their accounts. Explain how all of that money fills the vault so there's plenty on hand for other members to borrow some to buy their house. No complex dialog of mortgage rates, points, underwriting, please! Kids learn concepts best when they're taken down to their lowest denominators, so establishing the relationship between credit union family members and collective benefits of saving and borrowing lay the groundwork for a more extensive discussion as your child matures.
- 5). Encourage your child to save a portion of his allowance and job earnings in a credit union account. Show him how even small amounts of cash add up and earn compounded interest to increase their account balance. Remind him that he doesn't have to do a thing but keep a balance to get that extra cash. Talk about incentive. Even a 5-year-old can grasp that idea!