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How to Teach Your Kids About Money

At what age should my children open a savings account?

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Janet Bodnar
Kiplinger's Personal Finance Magazine
www.kiplinger.com  

Janet Bodnar is deputy editor of Kiplinger's Personal Finance magazine, for which she has written articles on a wide range of topics, including investing, money management and the economy.

Bodnar is a nationally recognized expert in the field of children's and family finances. Her latest book is Money Smart Women: Everything You Need to Know to Achieve a Lifetime of Financial Security (Kaplan). She speaks frequently on the subject of women and money.

Bodnar's "Money-Smart Kids" column appears regularly in Kiplinger's magazine and at <a>www.kiplinger.com/columns/kids</a>. It was chosen by Moneysmartz.com as one of the top financial columns online. Bodnar is also the kids and money coach on the AOL Coaches site.

Her book Raising Money Smart Kids (Kaplan Publishing) was a finalist in the personal finance category of the Books for a Better Life awards, honoring the best self-improvement books of 2005. It was also a selection of the Washington Post's Color of Money book club.

Bodnar has appeared on Oprah, Today, Good Morning America, The Early Show on CBS, Fox, CNN and PBS. She has done hundreds of radio and TV interviews and appears regularly on WUSA, the CBS-TV affiliate in Washington, D.C., and WTOP, the major all-news radio station in Washington. She is a popular speaker and has been quoted in publications ranging from The Wall Street Journal and Institutional Investor to Parents and Glamour.

Bodnar has been recognized by American University for excellence in personal finance reporting, and by the National Council on Family Relations for her televised reports on children and money. The audio version of her book (read by the author) received three "best of" awards, from Publishers Weekly (business category), Library Journal (nonfiction) and the Audio Publishers Association (educational category).

Prior to joining Kiplinger's, Bodnar worked for The Providence Journal and The Washington Post. She received her master's degree in journalism from Columbia University, where she was also a Knight-Bagehot Fellow in Business and Economics Journalism.

Married, she is the mother of three children.

At what age should my children open a savings account?

In this video, Deputy Editor of Kiplinger's Personal Finance and author Janet Bodnar answers questions on the many issues surrounding what kids should know about money.

This series: 35,478 views

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Host: At what age should my children open a savings account?

Janet Bodnar: Well, first of all I think that kids should be saving some money at a very young age, even preschoolers can do that with savings banks. Now, as far as opening a savings account that's a really interesting question. I think kids have to be around the age of eight or nine to at least understand what is saving account is all about. Kids are funny. They think that when they deposit their money in a bank, a regular bank that the bank is going to take their money and keep it on a shelf for them and when they come to get their money out the bank is going to give them the same bills and coins that they put in and if you try to tell them that that is not exactly how the bank is going to work. They will still get the $10 bill but it might not be the very bill that they put in they don't like that. They really resist that idea and this lasts pretty for a long and they have to be a little older and little more sophisticated to realize that they are not going to get the same $10 bill back and to feel comfortable with that.

So, when you open an account for them you have to be very careful to explain what's going to be happening to make sure that they are old enough to appreciate some of the abstract idea of how a savings account works but as soon as they can do that it's a good time to open an account.

Another little rule of thumb I have is that once the soft drawer is bulging with say over a hundred bucks. They have a got of couple of hundred bucks in there from birthday money and that sort of thing that's time to open a savings account and actually, put the money in the bank so it does not get lost or stolen. You always want to keep a little bit of money in the soft drawer that's the ATM machine for kids who can not drive themselves there on their own.

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