At this time of the year many of our children find themselves with some extra money. Not the usual pocket money, but sometimes quite large amounts. £10.00 from Auntie Sue, £20.00 from Grandpa - it all adds up and this can be the perfect opportunity to introduce your child to the wonderful world of saving!

Most of our children will have owned a piggy bank, whether they used it for saving or not. However, there does come a time to open a bank account for your child and it would seem that the earlier that the savings ethos becomes part of their lives, the better. Most high street banks offer a specially designed programme for their younger customers. Some offer incentives for saving regularly and are geared to keeping children interested. When you open a savings account for your child you are encouraging them to take an interest in their money and educating them for the future.

Interest

Some of the top savings accounts can offer up to 6% interest, but you do have to shop around for the best interest paying accounts. The lesson that you are attempting to teach your child is not to spend everything they have, but to allow some of their money to grow in a bank account. You should be educating your child to see the bank’s job as one to make them money rather than to be charging them!

The difference between saving at home and in a savings account is fairly simple. Explain to your child that when they put their money in the bank that they are lending it to the bank and so the bank is actually paying your child to use their money – this is what interest is. You can explain to your child what a percentage is and show them how much their £10.00 will earn after a year.

Involve your child in choosing a bank account. Ask at your local branch and shop around online comparing interest rates. Your child will come across all the tempting freebies along the way, which is another chance to teach them to look deeper into the actual benefits of each account on offer.