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.