So, today, we will teach in following steps about “How to teach kids about checking accounts?”
1st Step : To Teach Two Main Types of Accounts
There are two main accounts of basic accounting. For teaching to check the accounts, you should give the knowledge of two main accounts. One is Bank Account and Second is Income and Expense account. If your kid is perfect to understand everything about this, he will become perfect to manage his cash and earning.
a) Bank Account
You should teach your children that we keep the money in banks for safety and earning interest on our saved money. So, for knowing everything is ok, we have to make our bank account and verify it with passbook. There are four column of bank account. One is description, second is deposit and third is of withdraw and fourth is of balance. Every time, when we deposit the money or withdraw the money. Its balance will change. Balance means what is the money in your bank at this time. It will equal to total deposits and total withdraw. If there is difference between your bank account and bank passbook. It means there are some entries you did not record or bank also did not record some entries. So, Teach your kids, how to compare bank statement with your bank account. Your kids will tell you the reason why it is not matching.
b) Income and Expenditure Account
There are also two column of income and expenditure account. Your kid should add all the incomes in the income column and he should add all the expense in expense column. Now, you should tell the difference between income and expense will profit. Which your kid can save in his bank account.
2nd Step : To Teach Main Types of Receipt and Payment
Every deposit of money in bank account will be your kid’s receipt and every payment of money from bank account will be your kid’s withdraw. Now, you have to teach what are the main receipts.
a) Receipt pocket money from Parent and relatives.
b) Receipt money from any scholarship.
c) Receipt money from winning of any prize or reward.
d) Papa deposited money for your school fees or other books expenses.
e) Other receipts
Following are the main payments
a) Payment for buying books.
b) Payment through debit card for buying online.
c) Payment for school fees.
d) Other payment
3rd Step : To Teach Main Types of Income and Expenses
Your kids should know the difference between incomes and receipts. He should also know the difference between expense and payments. Incomes may be both cash, in kid or not cash form. For example, when your school has declared award 12000 pounds for your kids but still school did not pay. It is the income but it is not receipt. So, we show it in income column of income and expenses account. We should not write in receipt or deposit column of bank account. Like this there are lots of expenses which may be cash or not cash form. Both cash or outstanding expense will show in the expenses column of income and expense account.
Following are the main example of incomes of kids
a) Income from winning the competition.
b) Income from part-time work
c) Income from online work
d) Interest income from bank
e) other incomes
Following are the main expenses
a) Expenses on buying of books
b) Expenses on school fees.
c) Expenses on food outside.
d) Expenses for buying toys.
e) Other expenses.
3rd Step : To Use Computer Ms Excel
You should make excel sheet for showing bank account and income and expenditure account. Now, when you will enter the transactions in it. Ask few questions from your kid. Where is our expense (particular)? Where is our withdraw (particular transaction)? By asking this question, your kids checking accounts skill will develop.