Most children, regardless of their background, have a little bit of money that can be put to good use. Most banks offer children’s savings accounts, which can serve as vehicles for that good use. Money sense can be taught at an early age, and there is no better lesson that can be taught than the real life experience.
While a checking account offers its own lessons, it may not necessarily be a good idea for children to have their own checking accounts. Most offer no interest earned on deposits, and having such easy access to the funds defeats the purpose of putting money in the bank at that age.
According to Laura Shin of Forbes magazine, teaching kids about saving is an important money lesson. A savings account gives children an opportunity to learn how to put money away now, and save for things they may want later in life, rather than just pursuing immediate rewards. A savings account may be a location to put allowance, birthday checks, found money and the like while saving up for a pricier item or experience. It may also just be a place for kids to put there expendable cash while waiting for the world to present them with an opportunity to spend that money. In either case, an important life lesson is learned. Money does not need to be spent the moment it comes into possession.
While interest rates are not nearly as high as they once were, particularly with children’s low-balance savings accounts, by placing money in a savings account, children can learn about making money through savings. No matter how small the amount, many children become excited with the idea of earning money for doing nothing beyond leaving their money in a savings account. Along these same lines, children with large enough savings accounts may choose to put their savings into a Certificate of Deposit (CD) where they will be able to earn more interest.
For some children, these savings serve as nothing more than a necessary exercise for acquiring big-ticket items, such as a bike or a video game system. For others, the idea of savings may offer its own intrinsic awards. For these children, a lifelong understanding and appreciation for responsible banking is created with that first savings accounts. These children may not touch a penny in the account until college. For those children, a couple thousand dollars will be waiting for them when they need it most.
No matter how small the opening amount, a savings account is a great idea for any child.