Open a Saver Bank Account for Your Child
A wonderful way for your child to learn about the importance of saving money is to open a bank account while it is still young. It is a great educational tool, and can be a sense of pride for both your child and yourself . Although it cannot legally open an account by itself until the age of eighteen, it can still open one with you as the guardian of the account.
Spend some time with your child and explain to it about the importance of saving money, how he can do that at a bank, and how it can save up for things that it really wants to buy. Perhaps this can be the best time to start giving it an allowance as well, and the two of you can decide on what percentage to put in the bank each week. Explain how it can have some for immediate spending and some to save so it can buy things that cost more, or even save for college.
Have your child be involved in the process from the start. Choose a bank that is nearby so it can go with you to open the account, and it can go to make withdrawals and deposits whenever it wants. Go together to the bank and have the representative explain about how to make deposits and withdrawals and about interest. Make the account in its name so the bank statement is addressed to it. That way every month it can go over its statement to see how its money is growing. On the way home from the bank, buy it a binder or packet that it can keep its savings passbook, deposit skips, and statements in.
Every week when it gets his allowance, take it to the bank, let it fill out its own deposit slip, and let it experience how its account is growing. Every time it receives money for birthdays, holidays and other occasions, have it put it in the bank.
Explain to your child the benefits of short term saving and long term savings by example. Have it choose something that it can save for a few weeks for, like a special video game it has been wanting. Also tell it about long term goals like college or saving for its own car. Decide on how much of the savings should go for short term and how much for long term. When it has enough for the game, have it withdraw the money for it, and show it that it still has money there towards its long term goal. It will feel a sense of pride and accomplishment over having saved all by itself for the game.
A savings account teaches your child how to save towards a goal, and how the anticipation of getting it all by itself is a reward in itself. In this age of instant gratification, it is nice to see your child learn the benefits of setting a goal and meeting it.