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Why Your Middle School Kid Needs a Bank Account

By Motley Fool Staff - Oct 9, 2017 at 4:42PM

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With interest rates so low, it's a harder lesson to teach, but it’s worth the effort.

In this Motley Fool Answers video segment, Alison Southwick and Robert Brokamp are joined by personal finance guru, journalist, and author Beth Kobliner, whose most recent best-seller is Make Your Kid A Money Genius (Even If You're Not): A Parents' Guide for Kids 3 to 23. It offers a raft of straightforward advice for teaching your children the skills and habits that will lead them to lifelong financial stability. But since one podcast can't sum up a whole book (guess you may have to buy it), they'll focus on one fundamental concept: how to get your children into the habit of saving. For the tweens, a good place to start is with a good old-fashioned trip to the bank.

A full transcript follows the video.

This video was recorded on Sept. 12, 2017.

Alison Southwick: Let's move on to middle school. What can you do to help a middle schooler understand saving?

Beth Kobliner: I'm a real believer, first of all, in opening a bank account for a kid, middle school or younger. Right now, of course, interest rates are still so low, although they're rising a little bit. So maybe you can find 1%. There's some banks that give a little higher rate if it's a kid's account, so shopping around helps. But also going to an online bank if a kid is really interested.

I remember my son when he was little. He was maybe in sixth grade. He asked my husband one night, "Daddy, where does compound interest come from? And how can I get more of it?" Kids love to hear, "OK, well this is half a percent. And that's one percent."

In the end, it's not huge numbers. It was better in the '80s when CDs were at a much higher rate. But still opening a bank account. Feeling like you're a grown-up saying, "We're going to save and we're going to [get] statements." Unfortunately they don't have passbook savings accounts. But you get the statements, and seeing that money grow is empowering, even if it's just putting money into it.

I have memories, and I've said this at every talk I've ever given in the last year on a book tour. I say, "Who remembers opening their bank savings account?" And so many people 35 and up raised their hand and smiled. "Yeah, I remember. I opened my bank account." I think [it's important to make] that a real thing for kids because now, of course, it's all done online and it sort of becomes meaningless. I think being mindful of saving and talking about it can be somewhat motivating for many kids.

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