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Beyond Piggy Banks - Opening Your Child's First Bank Account

When your child's piggy bank or money jar gets full, it may be time to open an account at the bank. A bank account allows children to keep track of money they have saved more easily. Here are some tips for getting started.

Check out your local banks for kids' savings programs. The main bank that we use does not have a good kids' program and charges fees for low-balance savings accounts. However, a community bank has a good educational program and encourages kids to have their own savings accounts. It is important to find one that has a program for the kids to make sure their first experience is positive.

If you can find a program that includes ongoing education and communication, that's even better. At our credit union, for example, there are two mascot sock puppets that are the main characters. They are on the quarterly newsletters that come to the kids as well as having space on the website. They are also the ones who "sign" the birthday cards that come in the mail. Sure, this could be seen as simply smart marketing to keep kids as customers later (which it is), but it is also a great way to keep kids engaged in making their savings a regular habit.

After you've found a solid bank or credit union, talk to your kids about what putting money in the bank means. Younger kids really like to be able to touch their money. Giving it to someone else can make them uncomfortable even with you telling them that the bank is a safe place for their money. Be patient and help them understand that the bank is like a big piggy bank. The kids' savings program at the bank can also help them learn how a bank works and why it is safe. That may also mean that you have to make more trips to the bank or credit union at the beginning.

Our bank has an event on the first Saturday of each month to encourage kids to visit. If you can find a program that has established events like this, it can be a great way for the kids to feel like their money is being taken care of even if they can't see it and count it every day. Another way to keep them in touch with their money is to access it online. Kids are generally more familiar with technology and seeing their balance on the screen can be reassuring. They can even think of it like an electronic piggy bank. Plus, it will save you a trip to the bank!

Finally, it's time to actually open an account and make the first deposit. As a parent or guardian, you will likely have to be on the account in some way since children are minors (even at 16). But many banks accomplish this without having your name show up on the statement. If you can ensure that this happens, it will help your child still see this money as theirs when the statements come in the mail. My kids love getting mail of all kinds but especially can't wait to open their statements and see how much money they've earned in interest (it's pennies but they still love it).

When those statements do come, read them with your kids. Be excited about their account and the interest they are earning (no matter how small). Encourage them to set goals for their next deposit as well as longer terms ones for a new bike or clothes for school (that are outside your budget). Not only are they saving money, they are learning about setting goals and having some responsibility for their purchases. All of these are great steps on their way to understanding money and how to save it.

- Jennifer Peek is the editor of http://www.money-and-kids.com - the comprehensive guide to teaching children about money.

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