Should my kid have their own bank account?
What’s the brightest green you can imagine? Think of a green that will both get your attention while mildly stinging your eyes. That’s the color I remember from my earliest trip to a bank. The local branch was bathed in this color. The part I looked forward to, however, was the lollipops the tellers handed out. These neon tinged treats were that same color with the bank’s name printed in white lettering on one side. It was tasty and made my tongue a very unnatural color.
This is my first memory of going to a bank. What’s your first memory of banking? Do you remember your mom writing a check? Perhaps Dad opening a statement?
What about for your own children? In an age of banking on your phone, electronic payments, and more, do children even need a bank account?
"An intelligent heart acquires knowledge, and the ear of the wise seeks knowledge." Proverbs 18:15 ESV
Why Children should Have a Bank Account
Your child should have a bank account. This is a window to teach your offspring about many concepts and build good habits when they have “skin in the game.” What kind of ideas can this teach? Here’s a few:
Have you ever had a child ask the dreaded question: “Why do I have to learn this?” There are few more powerful and tangible examples than bringing money into the discussion. This can be a way at almost any age to relate an academic pursuit to the “real world.” The best part is it works from basic arithmetic all the way up to more advanced algebra. It can all play a part while building a valuable life skill.
Compound interest is related to math but deserves mention because of the importance behind the concept. Albert Einstein highlighted the importance of compound interest which is saying something. A friend of mine once told me a great way to think about this when teaching his children about interest. He would ask them: do you want to be paid interest or to pay interest to someone else? The effect of compounding over time is a great concept to pass along especially when your child has some skin in the game.
“Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesn’t, pays it.” Albert Einstein
The Marvelous Magic of How Compound Interest Works
Money is important and finite
As adults, we know all too well that money does not grow on trees, but we’re not born with this knowledge. Use a bank account to teach your young one that money must be earned and cared for. The safety of a bank account is one way to do this.
Checks, how do they work?
We write fewer and fewer checks these days. Some folks think that checks will disappear soon. While that may be the case someday, that’s a long way off. Learning to deposit a check is a skill your child should know. It teaches them to carefully review a document and ensure instructions are carried out correctly. Writing checks will have to wait until your child Is older, but the concept is still something you can teach them long before they sign the check themselves.
Let your child, within reason, use their account to save for a purchase. Even something small can serve as a target to help set a goal, save for it, and achieve it.
Thinking and relating actions in the present to results in the future
Linking behaviors in the here and now to outcomes you desire in the future is something we struggle with as adults. Give your child a head start by using a bank account to illustrate this.
Did you have a class when you went to school on how to read bills or statements? Neither did I. This is a chance to help your child by reviewing their statement every month. Help them by checking accuracy of any deposits or interest. Also teach them how to spot a fee and what to do about it.
Consider a savings account for your child. Most banks and credit unions have accounts with low minimum balance requirements for minors that are easy to set up. The next time a birthday envelope come from a relative with a bit of money, take a trip to the bank and make a deposit together. There might be lollipop for both of you.
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