I Review My Kids' Bank Account Balances With Them Every Few Months. Here's Why

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KEY POINTS

  • I don't let my kids keep piles of cash around the house.
  • I think it's important for my kids to see their money growing in a savings account.
  • I like to sit down with them every few months to show them their progress.

It's all about keeping them motivated and informed.

My children's ages range from 8 to 11, so clearly, they're too young to actually go out and get jobs. As such, the money they get their hands on tends to be cash that's gifted to them, whether for a birthday, the holidays, or to celebrate a lost tooth. And also, they don't tend to get their hands on hundreds of dollars at a time.

The tooth fairy, for example, might give them anywhere from $1 to $5, depending on how generous she's feeling. And while they might get a birthday gift of $25 or $50, even these aren't life-changing sums of money.

But still, I refuse to let my kids keep cash in the house. If they do that, they might lose it or bring it to school and use it for silly things (like buying snacks in the cafeteria) that are hard for me to monitor.

That's why every time my kids get some cash, whether it's $2 or $50, that money goes into their savings accounts. But my kids also know that these accounts exist, and that the money in there is theirs.

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Not only that, but I make a point to review my kids' savings account balances with them every few months. Here's why.

Being looped in keeps my kids motivated

When you're young and all of your money is tucked away in the bank, it can be easy to either forget about it or not realize that it's growing. But it's important to me that my kids realize that the longer they leave their cash untapped, the more interest they can earn on it.

My youngest kids (who are both 8 years old) are only first starting to understand the concept of interest. But my older child totally gets it. And now that savings accounts are finally starting to pay more generously (many high-yield accounts are paying 4% or more), I've made a point to sit down with my kids every few months and look at their balances so they can see how their savings are increasing.

This is an important thing, because on occasion, my kids will ask for a $3 withdrawal here or a $5 withdrawal there to buy what I consider to be silly things. Now I believe in giving my kids access to that cash, since it's theirs. But before I do, I'll remind them that taking small withdrawals here and there will lead to them having less money down the line. And that's gotten through to them.

In fact, another reason I review those bank account balances with my kids is to show them the impact of not taking those small withdrawals for fairly meaningless things. And now, my kids are more motivated to save up for bigger, more important goals.

A new option to introduce

I want my kids to feel empowered to manage their money -- with my help, of course. Now that CD rates are finally up, I plan to sit down with my children, explain the concept of CDs, and ask if they want to put some or all of their money into one.

I'll make sure they understand they're making a commitment, and that they won't be able to take withdrawals for a preset period of time. But I'll also be sure to explain the upside -- earning a higher interest rate on money they aren't planning to use right away.

All told, I believe in educating my kids about personal finance, even though they're pretty young. But in teaching my kids to take pride in growing their savings now, my hope is that they'll be motivated to continue growing their savings as adults, too.

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Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor
Rating image, 4.00 out of 5 stars.
4.00/5 Circle with letter I in it. Our ratings are based on a 5 star scale. 5 stars equals Best. 4 stars equals Excellent. 3 stars equals Good. 2 stars equals Fair. 1 star equals Poor. We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs.
= Best
= Excellent
= Good
= Fair
= Poor

APY: 4.25%

Rate info Circle with letter I in it. 4.25% annual percentage yield as of July 15, 2024

APY: 4.50%

Min. to earn APY: $1

Min. to earn APY: $0.01

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