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What You Should Teach Kids So They Save Money

Apr 10, 2008
If your son or daughter's piggy bank is nearly overflowing, it may be time to consider opening up a bank account for them. An account helps teach children how to keep track of money easier. There are a few different types of savings accounts that you should consider for your child.

As soon as your child has money of their own, they can start a savings account. Find a day with free time and make a trip to your bank branch. Tell the bank associate there that you are interested in setting up a child's savings account.

You and your child can open a statement savings account. This account gives both of you a monthly report of all account activity. It includes all of the deposits that your child has made into the account and all of the money that they have taken out of the account.

Read over the statement carefully with your child. Explain the various parts of the statement to them. Show them how much money they had and what they ended up with after interest payments and other account activity. Most statements list withdrawals and the date but not a detailed description of the transaction. You can write on the statement what each transaction was for so that the children get an idea of how they are spending their money.

You might also be able to get a passbook savings account. Each account holder is given a small "passbook", and the book is run through a machine which records all of your transactions. Your child can find out their balance right away, rather than waiting for a statement. Kids tend to like this, as they can look at their current transactions and balance whenever they want.

Aside from bank accounts, you can also go to a credit union to get a savings account. They offer accounts for children of their members, which are designed for children of different ages. When they get an account, they may also get an ATM card (with or without their photo on it) and other gifts for starting an account.

This ATM or debit card, can be used like cash by your child when they wish to buy something. Parents should keep the purchase receipts and teach children how to verify them against a statement each month. They should also be taught to deposit a percentage of their allowance.

For children under eighteen, some states will offer what is called a "custodial savings account". This type of account states the parent's name as the account holder, with child's name under it. When the child turns eighteen, ownership of the account can then be transferred to the child (now young adult).

Savings accounts are a great tool for teaching money management skills. Kids can keep track of their money easily and even use an ATM/debit card to make purchases or withdraw cash.
About the Author
Get more info about credit card consolidation and other effective ways to reduce credit card debt on the Debtopedia.com website. Get a free copy of my special report "Secrets Of Credit Card Debt" at http://www.debtopedia.com
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