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.
The Motley Fool has a disclosure policy.