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My 6-Yr. Old Has Earned 100 Dollars and We Are Opening a Savings Account

This past Saturday my 6-yr. old son and I made a trip to our local bank. This trip wasn’t for me though. He was there to open his very first savings account.

savings jar with $100 bills His first deposit was for $103, a very cool amount of money for a six year old to already have. The best part about this money though is that it was earned. All of it came from commissions he has earned from doing work around the house.

My wife and I don’t give our kids allowances for reasons that I’ve shared before. We believe in giving commissions. We developed a chore sheet with assigned tasks for each child based on their age.

Our kids do the assigned work they’ve been given each week and they get paid for that. Don’t complete the work and they don’t get paid. It’s as simple as that. I think that accurately reflects what will take place in a real world work environment.

Teaching Kids About Savings and the Bank

We start our kids out with doing paid chores at age five. So for one year and a few months now Doot-Doot (our 6-yr. old) has been doing five chores per week for which he gets paid five dollars. Two dollars goes into his savings jar, two goes into spending and one dollar goes towards giving.

Obviously, with those numbers he should have saved a bit more by now. But he’s missed doing work a few weeks along the way due to sickness, vacations and just plain old forgetfulness. Remember, you don’t complete the work you don’t get paid. But through it all he’s finally managed to save $100.

There is no magic behind the $100 amount being THE threshold to open a savings account at a bank. That’s just the number my wife and I decided upon. We wanted them to have some fun for a while piling up dollar bills in their savings jar at home.

Plus we wanted to build up excitement about the bank and make sure they understand what banks do with their money.

Think about this from a child’s perspective. They spend all this time stuffing their jar full with money and then one day take it all to a large brick building. They hand all their money to someone sitting behind a tall counter they can’t see over. They then get back a slip of paper with numbers written on it (a deposit slip) and maybe a sucker if they are lucky.

“What happened to my money?” That’s the question my first daughter asked when we left the bank after her first deposit. That’s when I realized I had to do a better job of explaining to the subsequent kids what banks actually do with their money.

When I did explain it better to our next two kids that opened accounts I found they could easily get it. Kids at six can understand the main function of a bank – which is to provide security for (savings) and a means of transaction for (checking) your money. And believe me, just like you and I, they like the feeling of knowing their money is secure.

A Special Reward

Besides the sucker he got at the bank this past Saturday, Doot-Doot received one other special reward. Years ago my wife and I decided that for the very first transaction each of our kids made into a savings account, we would double that transaction for them with some of our own money. It’s our way of saying “Thank you” to them for their hard work around the house and their commitment to save.

It’s not too early even at five or six years old to begin explaining how banks help us with money. Kids will understand and it will help build excitement for when they get to open their own account. I know my older kids love going to the bank now and it’s not just for the suckers.

When did you (or your child) open their first savings account? What questions did your kids have about banks that you hadn’t explained? Do your kids love watching the canister shoot through the pneumatic tube to the teller?

Image courtesy of TaxCredits.net

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Prior Post: 6 Financial and Emotional Reasons to Reconsider Early Retirement

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Comments

  1. I remember going to the bank with my Mom on Fridays. I would deposit my money (a lot to me) and let it grow. Earning just a few cents worth of interest amazed me. A few years ago, we found our old saving passbooks. I had to laugh because my “big money” deposits were $2 here and there! Still it had an effect on me that has stuck to this day.
    Jon recently posted…3 Biggest Drivers of Retirement Savings SuccessMy Profile

  2. What a fantastic amount as a first trip to the bank! I think I paid on £2 when I opened my first bank account 🙂
    Nicola recently posted…The Pros and Cons of Loyalty CardsMy Profile

  3. That’s awesome, Brian! I’m pretty sure $100 seems incredible at 6. I agree that saving the money and watching it pile up has an affect. This is a great way to show your kids the value of saving!
    Erin recently posted…Student Loan Update #6 (and a confession)My Profile

  4. Your son is off to a great start. Wonder how much that will be worth in 20 years?

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