When’s a good age to open a savings account for my child?

You can help children open savings accounts as soon as they save more in their piggy banks than you feel comfortable letting them have easy access to – either because you think it might be too tempting to spend, or you fear it could get lost.

A good way to introduce your child to banks or credit unions is to explain that we use these institutions to keep our money safe and to receive interest. Even younger children will understand the safety and security part, but you might want to save a detailed explanation of compounding interest, or how our banking system works, until they’re able to get it.

If your child asks why banks pay us for keeping our money safe, you can explain simply that banks and credit unions use our savings to make loans to other people. They charge those customers a little extra when they pay the money back, and we get a portion of that.

You can also explain that the deposits we put into a bank or credit union are insured through the federal government.

Tip: Shop around for accounts that require low initial deposits and no minimum monthly balance. You wouldn’t want your children’s allowances to be eaten up by monthly fees.

The next time you go to your bank or credit union, have your children come along. Show them the vault and introduce the tellers. Ask about interest rates on savings accounts and open an account.

If your bank offers online access, let your child see their balance from time to time and discuss how they could make it grow.

For more money activities for your child, download the Money As You Grow activities flier, which describes money milestones for kids at various ages.

,You can help children open savings accounts as soon as they save more in their piggy banks than you feel comfortable letting them have easy access to – either because you think it might be too tempting to spend, or you fear it could get lost. A good way to introduce your child to banks or credit unions is to explain that we use these institutions to keep our money safe and to receive interest. Even younger children will understand the safety and security part, but you might want

This article by the CFPB was distributed by the Personal Finance Syndication Network.

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