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Taking Kids to Money School

RBC Bank Offers Advice on Simple Savings and Investing Basics for Kids

RALEIGH, N.C. – Aug. 17, 2009 – As families hit the stores for school supplies, backpacks and new clothes, parents have a great opportunity to give their kids a crash course in financial literacy.

"Without proper guidance, troublesome financial habits can develop quickly in kids, and they can continue well into adulthood, sometimes lasting a lifetime," said Verna Gessaman, senior manager, community and economic development for RBC Bank. "Teaching children the importance of money management will serve them well in any career, so it’s critical to show them good habits early on."

Whether your kids are headed to kindergarten or college, back-to-school is an excellent time to talk about earning money, budgeting, investing and credit.

Here are some of the saving and investing basics your children will enjoy learning.

Learning to earn
Paying your children an allowance to do family chores is a good way for them to learn the value of money. It also opens the door for discussing the essentials of financial planning, such as banking, saving and spending.

Encourage your children to put aside a portion of any money they receive. They will learn quickly that spending their hard-earned money on an expensive pair of shoes for back-to-school may mean they can’t afford to buy a more expensive video game later.

Beginning to budget
Offer to help older children establish a workable budget. The budget could factor in money they earn or receive, regular expenses they expect to incur and required savings for specific goals.

Budgeting can help them distinguish between short-term savings (a new CD), medium-term savings (a new bike) and long-term savings (for college).

Investing for growth
As your children grow older, you can teach them the basics of investing. The first step might be to open a savings account for them. This is an opportunity to discuss how banks pay interest for money on deposit. With straightforward compound-interest calculations, you can show how quickly a regular amount set aside each month can grow.

As a next step, try letting your older children invest in a company that produces something they know and like or a mutual fund that invests in these companies. Showing them where to find information on their holdings in newspapers and on the Internet will make tracking their investment fun and rewarding, and give them a real sense of ownership.

Co-signing for credit
New legislation goes into effect in February that requires people under the age of 21 to have a parent, guardian or spouse co-sign for a credit card or show proof of income. While this may prevent college students from quickly sinking into credit card debt, it also means that mismanagement by the student will reflect on their parents’ or co-signers’ credit score.

Co-signing for your child’s credit card provides an opportunity to discuss the importance of sticking to a budget and establishing a solid credit history. Also, students should be aware that the law does not go into effect until February, and it’s likely they will receive credit card applications before that deadline in the campus mail.

About RBC Bank
RBC Bank, headquartered in Raleigh, N.C., offers a wide range of financial services and advice to individuals, businesses and public institutions throughout the Southeast. RBC Bank’s network includes more than 430 full-service banking centers, an extensive ATM network and telephone and online banking. RBC Bank is the 40th largest U.S. bank by consolidated assets, according to the Federal Reserve Statistical Release June 30, 2008. RBC Bank is a wholly-owned subsidiary of Royal Bank of Canada (RBC) (RY on the TSX and NYSE), Canada's largest and most stable bank as measured by assets and market capitalization. Global Finance Magazine named RBC the best bank in Canada in October 2008, and the safest bank in Canada for 10 consecutive years, from 1999-2008. RBC is also one of the world’s financial, social and environmental corporate leaders for the past eight years as on the Dow Jones Sustainability World Index. Additional information about RBC Bank may be found at

For more information:
Dorsey Landis
RBC Bank/(919) 788-6272