Savings/Checking Accounts for Children (Teaching Kids About Money)

This article is part of a series on Teaching Kids About Money.

I believe many children either don’t have a savings/checking account or they aren’t aware they have one available to them. My own parents were very conscious of making sure they were saving money for my future. It’s taken nearly 30 years for me to finally realize how lucky I was that they were able to do that for me, but I digress. Though my parents were actively saving for me, taking the money given to me as gifts and depositing it into my college fund, I actually had no transparency to where that money was actually going. So, at that point, all I knew was that my parents took my money, placed it somewhere, and I wasn’t going to see my money for a long time. I didn’t understand what the benefits of opening a savings/checking account were. And this a key point to helping teach kids about money management.

What can a child learn from having their own savings account? Plenty. Here’s to name a few:

  • The process of opening an account in person. Nowadays, we have abstracted the need to go to a physical bank in person to open an account and do everything electronically. If your child is younger than 16, and your bank has a physical office, I would recommend taking them to open up an account. Why? Though the information of the various savings accounts are available online, it’s always best to have a person walk you through every nook and cranny. This also gives your child an opportunity to exercise their social development skills and learn to ask the experts the right questions.
  • The power of compound interest. Similar to what I mentioned in, Prepaid Credit Cards and Kids, teaching your child about compound interest will help them understand what their money can do for them if they focused on saving and not spending. But difference between what I mentioned in Prepaid Credit Card and Kids, it will be coming from the bank’s pocket – not yours. Though nowadays, the interest rates are fairly low for savings/checking accounts.
  • Learning the pains of withdrawal. Savings/checking accounts may not provide the best return in terms of interest rates, but it does provide the best flexibility when it comes to access to your money. And though we would all probably prefer to have children learn about depositing money, they’ll eventually want to withdrawal their money as well. With every withdrawal they’ll learn to live within their means, which is a huge lesson for any person to learn at any age.
  • Reviewing the bank statement. It’s not like reading the financial section of the Wall Street Journal, but it’s a start. You can teach your kids about the different vocabulary used within the statements, but more importantly, you can teach them how organized the data is. The sooner they learn to keep their finances in order, they closer they are at being financially responsible.

If you’ve already opened up a savings account for your child, which one did you open and why?

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