Why Your Child Should Have Their Own Savings Account

 

As parents, we try our best to pass on the life lessons we have learned and the knowledge we have acquired during our own lifetime. One of the best lessons we can pass on to our children is the ability to manage money. Knowing how to manage money starts with understanding the value of money. One of the best ways to teach your child the value of money is to open a passbook savings account for him or her.
By opening a passbook savings account for your child, you can bring back the concept of good old fashioned tangible money to your child. An old fashioned piggy bank is not a bad idea either. There are some things that even modern technology cannot improve on and this is one of them. By paying your child an allowance, in actual dollars and cents, he or she can then save that money in the piggy bank until there is enough to warrant a trip to the bank. At the bank, you can teach your child how a bank operates, how to deposit the money and how to keep track of the money in the account. As your Trying to explain money to a school age child is like trying to explain the universe — they know it is there, and it’s remotely interesting, but defies explanation as far as they are concerned. In today’s digital age it is becoming even harder to explain the concept of money to children. As parents, we often pay for purchases using a charge card or debit card, we pay bills online, and we are even paid by direct deposit in many cases. As a result, children rarely even see actual paper money anymore. From a child’s perspective, bills are paid by clicking a button on the computer and groceries are purchased by swiping a plastic card. Without ever seeing actual money pass from one hand to another, understanding how much something costs becomes even more elusive to a child.

child gets older, you can even add in a lesson about interest.

If your child is like most kids, there is that one special toy he or she has been eying for months. Explain how much the toy costs and then set a mutually agreed upon goal. For example, you could decide that once your child has saved twice the cost of the toy, he or she may withdraw the money to purchase the toy. This teaches both the necessity of saving money and the value of money. How hard did your child have to work for that money? By understanding how hard he or she had to work for the money, and how long it took to save it, your child will have a better appreciation of how hard you work to pay the bills.

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