Why you should open your kid’s first bank account together—and in person

Why brick-and-mortar banks still matter

Jake didn’t have a bank account until he was 18 or 19. The manager for a plumbing contractor in Arkansas worked throughout high school at an auto mechanic shop but was always paid in cash. Now 35, Jake has an 18-month-old son, Hudson, and a 7-year-old stepdaughter, Kayla, and he wants to raise them to be more bank-savvy than he was. Which means both of them already have accounts of their own. Yep, even little Hudson.

Jake is a rarity. In my experience, most parents know it’s a good idea to help their kids open a bank account, but few of them follow through. One dad I know in Connecticut finally opened one with his 14-year-old son when his boy started getting checks from relatives for his college fund. “When I saw the impact that going into a bank and opening an account had on Ryan, I wished I had done it sooner,” he told me.

You read that right: a big impact from going to a bank. Remember those—the ones with the free lollipops? Even now, when money apps and online banking are the default, one of the best things you can do for your kids’ financial lives is to bring them up to an old-fashioned teller window. When I give talks, I always ask who remembers opening their passbook savings accounts. It’s a question guaranteed to make an audience smile. The reason? Pen and paper made the abstract world of savings more concrete. While passbook accounts have, sadly, mostly gone the way of the abacus, opening a bank savings account with a real human, filling out a paper deposit slip, and maybe even seeing the bank vault (!) can make the world of banking real for kids in a way that touchscreens can’t.

Just ask Jake’s partner, Allegra, who helped their children open the accounts. She takes Kayla with her when it’s time to make deposits in the kids’ accounts as well as in her own, and she talks to Kayla about what she’s doing. When Allegra opened the account for Hudson, who was still in a car seat, she brought Kayla along to watch. These teachable moments will stay with her kids.

Still, while Allegra believes it’s important for kids to have a bank account from an early age, the concept of saving money in a bank can still be hard to grasp—even for Kayla. That’s why, for Allegra, the tactile lessons of an old-school piggy bank are at least as important.

“The piggy bank is basically providing a visual for the concept of what a savings account is. Kids just want to go buy Play-Doh or whatever the new fixation is,” Allegra said. “I talk to Kayla about savings. She has her own piggy bank at home that money is not ever to be taken out of—money that is right in the grips of her fingertips.”

One of the best things you can do for your kids financial lives is to bring them up to an old-fashioned teller window.

As their children get older, Jake and Allegra plan to have them keep adding to their bank accounts, little by little. Allegra explains to Kayla that by saving money, she’ll be able to afford a used car when she’s 16, and college after she graduates from high school. For now, it’s enough that their children know the accounts are there and have the experience of visiting the bank to make deposits. Plus, they get to see that their money is earning interest—unlike what they stash in a piggy bank—without having to do a darn thing!

Ready to open your own kid’s first savings account? Here are a few tips.

Start early.

Your kid doesn’t need to be a teen with a part-time job. As soon as your kid is old enough to get the basics (a bank is a place where you put your money to be safe), open an account.

Choose a kid-friendly bank.

Many banks charge a fee if an account balance falls below a minimum. There’s nothing worse for a kid than putting his money in this strange building for safekeeping and then finding out that he’s lost much of it to a monthly fee. So look closely at a bank’s policies and ask about special options for kids. Often banks (and credit unions) offer children’s accounts that waive monthly fees and/or minimum balance requirements, especially if an account is linked to yours. (Note that these accounts sometimes require a parent’s approval before funds can be transferred or withdrawn.) And according to the National Credit Union Administration, more than 360 credit unions nationwide have branches located inside of schools. This may be a great option for your kid, especially once he’s a little older. A final note: Before you go to the bank, it’s worth calling ahead to see if someone’s available who is especially good at talking to kids.

Explain what banks are for.

Of course, there are lots of reasons that using a bank is handy. But since your kid isn’t paying bills or taking out a mortgage yet, there are really just a couple important lessons to convey right off the bat. One is that banks are safe places to store money. By law, banks and credit unions must display signs declaring that depositors’ money is federally insured—which means that if someone robs them or they go out of business, your kid will get her money back. When you’re at the bank, point out the signs (“FDIC” at banks and “NCUA” at credit unions) and explain what they mean.

Talk up interest.

Another great reason for your kid to put his money in the bank is that he’ll earn interest. Essentially, he’ll get free money as a reward for storing his cash there. As most parents know, of course, the interest rate on bank savings has been next to nil the past few years, though rates have recently started to rise. Still, even at 1%, an account with $150 in it will earn $1.50 in the first year—free money that can be pretty exciting to an elementary schooler. (Older kids might be interested to learn about how that interest compounds over time—how interest earns interest on itself.) To up the incentive, consider matching funds whatever your kid puts in—say, 25 cents or 50 cents on the dollar.

Take your kid along.

As I said above, the physical act of going to a bank will probably mean more to your kid than the mechanics of making a deposit, at least when she’s young. So don’t just make deposits on her behalf. Take her along. This means avoiding exclusively online banks at first. When your kid is older, an online bank that pays competitive interest rates may make more sense. (Shop around at Bankrate.com or DepositAccounts.com.) But for now, walking through the glass doors and interacting with a teller is where it’s at.

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