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To help your child better manage money, trade up from the piggy bank to a savings account.
The second wave of a large-scale international study on financial knowledge among 15-year-olds came out Wednesday, and U.S. performance is still lackluster. About one in five U.S. students don't meet baseline levels for financial literacy proficiency, according to the PISA 2015 Financial Literacy assessment. Only 10 percent are considered "top performers" capable of analyzing complex financial products and problems.
Among the 15 countries and economies in the Organization for Economic Cooperation and Development's study, the U.S. ranked at best 7th and at worst 9th, based on the range of scores from its 1,486 students tested on financial literacy. Globally, more than 45,000 students took the test.
There's one item higher-scoring students have in common, that parents can quickly implement: A bank account.
Among the U.S. cohort, a little more than half had their own bank account. Those teens scored 42 points higher on average; or 22 points higher, after accounting for economically advantaged students' higher likelihood of having an account.
(The study also looked at prepaid debit cards but did not find the same link. "Having a prepaid debit card is only weakly associated with financial literacy," the report notes.)
Financial literacy experts say that hands-on money management experience is key for financial literacy. Using a bank account — and particularly, a savings account — helps even young children learn about saving and spending, said Billy Hensley, senior director of education for the National Endowment for Financial Education.
"You can start to build this cumulative experience with money, and then it's part of what you do every day," Hensley said.
It also offers the opportunity for teaching moments, he said, should a child make missteps such as withdrawing savings for an impulse purchase or incurring an ATM fee.
The best way for parents to start is with a savings account, said Greg McBride, chief financial analyst at Bankrate.com. That helps kids learn good financial habits and how to save.
"The beauty of starting with a savings account is, it's teaching them to make deposits and watch that balance go up," he said. "Once they have a checking account and a debit card in hand, it's way too easy for that money to come out. And that's where they get into trouble."
Younger kids may benefit from the experience of actually going to a branch to open the account and make deposits, instead of using an online-only account, he said. Check local banks and credit unions for accounts geared toward kids or students. (Depending on your child's age, you may need to sign on as account co-owner or custodian.)
"By design, a lot of those accounts don't have balance requirements or monthly fees," said McBride.
Once your child has an account, help him or her make the best use of it.
Students in the OECD study who said they have a bank account were also more likely to report earning money from a part-time job or receiving gifts of money from friends and family. They were also more likely to say they talk about money with their parents on a regular basis.
"As a parent, monitor the account," McBride says. "You want to make sure they aren't forming bad financial habits."