1. It is very important for kids to have bank accounts. They need to learn the value of saving and also of managing money. My first checking account was when I was 13 and had a newspaper route. I got my first taste of sales, and of collecting. I would collect money from customers and then deposit it into my account. Then I would write a check to the newspaper for the papers.

    The great thing about something like that is that it gives kids a chance at running a real business.

  2. When my son was 7, there were a few times that I had him go up to the bank teller and with cash and deposit slip in hand, and deposit his money into his bank account. I don’t think he fully understood the entire process, but going thru the actions is still worth it.

    Now he’s 9, and I have to revisit the point, to date I’ve had him split up his allowance, with a portion going to spending. But now I’m thinking of having him deposit it all, then withdrawaling money when we want the money.

    My next challenge is to get him (and my daughter) involved in the stock market (in a small way…).

  3. Both of my boys have savings accounts where we stash money away for them. One is 3 years old and the other 6 months. My oldest collects change, and recently allowance, which we sock away in a piggy bank until his birthday. Then we empty it out, count it up and head to the bank to deposit it. He is way to young to understand but we go through the motions.

    I agree that having them track their deposits and withdrawals can be a powerful thing. Not to mention it is a skill a lot of people never even learned.

  4. This is very important and I wish I had been fully educated at a young age… sadly I wasn’t.

    A friends daughter here in Cairo is 5 and has the full bartering system figured out…. It didn’t go down too well when she tried to barter in TJ Max when they went back home for xmas break.

  5. Great reminder to actually take our kids to the bank and let them see how it works. My daughter is 2 and has had her savings account since she was a couple weeks old. Right now I deposit money into her savings account automatically, but I think I’ll have to start making it a point to actually take her into the bank and make a deposit a couple times a year. She’s still pretty young, but she often surprises me with just how much she does understand.

  6. When my son was 8 I started following the program from the book “The First National Bank of Dad”. This is designed to teach him the power of saving and compound interest. He gets a weekly allowance and can earn extra money through chores. He must pay for his own candy purchases and toy and game purchases. At the end of each month, I pay him interest of 5% on whatever money remains in his account (I know that’s a lot but it needs to be at this age to get the point across). It’s mostly been a powerful way for him to realize the tradeoffs of spending vs. saving – he thinks through his purchases and as often as not decides he doesn’t really need that latest game after all. Luckily he hasn’t completely stopped spending, otherwise that 5% compounded monthly would bankrupt me 🙂

    He also has a bank account but we haven’t done much with it. The interest rates are so low that it provides no real insight into the power of compound interest and investing.

    He’s learned the core lesson of balancing spending vs. saving through the “Bank of Dad” process. I’m now looking to transition from “bank of Dad” to true investments.

  7. I learned how to write a check from a friend who went to a vocational school. They taught a mandatory finance class there.

    It’s interesting how it’s not mandatory at most schools and they assume you just learn it through osmosis or something.

    My mom never had a checking account (cash is king). I still value the lesson of how to write a check properly to reduce fraud. Simple things like make sure your don’t leave extra space in the numbers box for someone to turn a check for $10 into $110.

  8. It’s surprising and sad to see how so many children grow up without being taught the basics of money, writing check, savings and checking accounts etc.

    My daughter’s friend is 22 years old and is clueless about how to write a check correctly. Or at least he WAS clueless until I sat down with him and showed him how to do it.

    Online banking is great, and we pay some of our bills online too. But, from what I’ve seen with many young adults and teens is that they set up an online checking or savings account and never bother to balance their accounts with their monthly statement. Ever.

    They often check their balance online, spend money that really isn’t there because their account doesn’t update as quickly as others. Then they find themselves in the red, bounced check, plus the fees.

    That in itself is another teaching tool for kids and teens. What happens when or if they spend more than they have in their account, and the fees they are charged for even the first mistake.

  9. My kids have had savings accounts since they were infants. At first we put any money that was gifted to them in there for them. Now that they are older, they put part of their gifted or earned money into savings and use the rest for spending/giving. We encourage them to follow a 10% giving, 40% spending, 50% saving plan for their money but sometimes it varies. Whatever goes into the bank account is for long term savings though. They cannot withdraw it to buy something like an ipod, Nintendo DS, etc. That money is designated for future use like a car, college, etc. They absolutely love going to the bank and making a deposit.

  10. This reminds me of a roommate I had in college. Following a long tearful conversation with her parents on the phone in another state that involved her looking over her checking register. She asked me,”Did you know when you get money out of the ATM, that they take it out of your checking account??”
    I’m not sure where she thought the money was coming from, maybe a party fund of sorts!

  11. My mom took me to get an official Texas Identification Card when I was 6. She then drove me to their credit union and had me sign up for my own savings account.

    She explained how the account worked and how interest worked…within a few years, I was hoarding absolutely every quarter I earned like a squirrel. I had enough saved up by middle school that I bought my own tenor sax for band. It hurt to watch all my money go away, but it sunk in.

    By 13, my parents had shown me how to write a check properly and I understood how credit cards work too (don’t make a purchase unless you’d be willing to use cash you already have).

    I’m now in my mid-twenties and am very grateful for the parents I have…

    Thanks to all the parents teaching their kids the basics!!!

  12. Hi! I feel that savings accounts are pretty useless in this time. My son had some money in savings account & got laid off & didn’t have any activity in his account for 6 months, so they took $10 as an inactivity fee . And at our credit union they did the same thing to us, taking $8 . Sure take a lot more than they deposit as interest.There are fees for everything in these accounts these days. Leave the account alone, they take it. Use the account , they charge you extra.

  13. Like Bob K, I followed an approach like the one described in the book First National Bank of Dad. I like the flexibility, friendliness, and convenience of a “virtual bank” over a real bank and the lack of hidden/”gotcha” fees like the ones mentioned by Lisa. Initially, I kept the “virtual bank” accounts in a spreadsheet, but, being a computer geek, ended up building a web site so the kids could sign in to the bank themselves. Over the years, I built it out into a more elaborate service that others can use. It’s available at If that sounds interesting to you, please take the tour from the home page.

    To be fair, there are other similar services out there, so google around and compare to see what fits your family. Ours is designed to scale up through the teen years.

    You can also combine the two approaches (real world savings/investment accounts virtual family bank) which might be the best of both worlds.

  14. I agre with the savings account. My question comes in check writing. Is there a purpose for this? I teach sixth grade and wonder if my students will ever use a check when they hit college. Do you think this chapter in financial education needs to be rewritten? How could you rewrite it?

  15. @Jan: True that checks could one day become obselete. However, for now, I believe they are a great tool for explaining the process of balancing a checkbook because they are not an instant deduction from your checking account.

    It takes a little practice to get used to deducting “obligated” money outstanding in the form of checks floating around. Trust me; I know adults that don’t get this concept. They get their balance on the ATM slip and assume that’s how much money they have to spend, forgetting the $295 utility check they wrote two days ago.