... just said he wants to open a savings account so that he can start saving for a car. "It's going to take me a loooong time so I may as well start now." He's serious!

By Kay on Saturday, November 12, 2005 - 12:49 pm:

That is so cool, and very impressive! In 2000, when my dad knew he was dying of cancer, he gave each of my 3 kids $1000, because he said he wanted to enjoy seeing their delight while he was alive. They each placed it in the bank toward their 'car funds'....the youngest was 9 at the time, and although she has dipped into it on occasion, she also makes deposits of birthday money, etc. She's 15 now, and will be looking around at cars next October.

By Karen~moderator on Sunday, November 13, 2005 - 01:57 pm:

Then let him open one, T!!! I think that's sort of neat that he's thinking about that AND the fact that he's serious!

By Bemerry84 on Sunday, November 13, 2005 - 11:52 pm:

Savings accounts are great for kids. Mine have had them since K, the credit union comes right to their school once a week. My 14 yr old DS bought a $1000.00 Toshiba laptop in the spring with his savings and is now saving for the car. It's great and helps them learn the meaning of money.

By Ginny~moderator on Monday, November 14, 2005 - 05:44 am:

He's 9, so it has to be opened by an adult, but it could probably be joint.

Suggestion - look into ING Direct http://www.directjoin.com/ingdirectg.html

They are presently paying about 3.5% on straight savings, no minimum balance. The catch is, you do it by mail, internet or phone, and they provide minimal service. You either send them a check, or transfer money from or to your checking account (or whatever account you select). No offices, no branches, no other services. Their savings accounts, CDs and money market accounts are FDIC insured. They also have investment programs (not FDIC insured) and make mortgage loans. They send you a monthly statement.

It is a minor nuisance to have to make deposits (and withdrawals) that way. The advantage, to a kid with a savings account, is that it is a hassle to have to order a transfer and wait 2-3 business days if you want to make a withdrawal, but that tends to deter making a withdrawal for a frivolous reason. I've used ING for a couple of years now, at the recommendation of one of my sons, and it works very well for me.

Most banks pay a lot less in interest, and usually have a minimum balance of at least $100 and usually more. And many banks charge fees which eat up the interest and even some of the principal if you have less than $500 or $1000 in the account.

If, however, you have a credit union he can join, or you can join on his behalf, that is also a good idea. I just don't think a "regular" bank is a good idea because I think between the low interest and the possibility of fees, he won't see his savings grow. Watching that interest go into the account each month is a good incentive for building a saving habit.

By Beth on Monday, November 14, 2005 - 08:36 am:

I second Ginny on the Ing thing. I have been with them since last Jan and I think the savings percent has went up 4or5 times. I seriously lost track of how many times. Its great!

By Ginny~moderator on Monday, November 14, 2005 - 04:12 pm:

Thanks, Beth. The advantage, of course, to a credit union is that there is probably a physical office you can take him to so he can hand in his money himself, which I remember to as an impressive process.

By Trina~moderator on Monday, November 14, 2005 - 04:34 pm:

Thanks for the tips everyone. DH and I need to decide exactly how we want to approach this. I'm all for DS opening his own account but we need to find a way that's convenient and most beneficial. DH is good with finances so I'm sure we'll come up with something. Gosh, I'm just surprised DS wants to start saving now for a car.

By Kate on Monday, November 14, 2005 - 04:43 pm:

What exactly is a credit union?

By Ginny~moderator on Monday, November 14, 2005 - 07:41 pm:

Historically, credit unions were started by workers' associations, like unions, for their members - most of whom were not comfortable with banks (and banks were not exactly welcoming to working class folk). My guess is that they grew out of the burial funds that guild and then union members contributed to so that they would have a decent burial and a little something left over for their family.

Nowadays, they are licensed and under regulation by a federal agency similar to and part of the same department that oversees banks, but an "affinity" of some sort is still required, though the affinity can be rather loose. For the Philadelphia Credit Union, for example, you have to live or work in Philadelphia or be a member of a religious organization located in Philadelphia. Generally, credit unions pay a little bit more interest than banks, and charge a little bit less on loans; and many issue credit cards from the Visa/Mastercard systems. I don't know if they have checking accounts, per se, but probably at least some do. I believe they are generally required to be, technically, not-for-profit. I know that when I was a really poor newly single parent, my area credit union gave me a really low interest loan for rehab work on the house I had just bought, along with a federal+city grant because my house was in a low-income area. If you want to find a credit union in your area, I note that if you type "credit unions" into Google, a bunch of sites come up that list credit unions by state and area, along with the websites of the National Credit Union Administration and the Credit Union National Association.

By Annie2 on Monday, November 14, 2005 - 08:18 pm:

All of my kids have had their own accounts in their name first then my name. They deposit half of money received as gifts and can deposit money from sitting, etc.

It teaches them to save; nothing wrong with that. I don't find running to the bank every so often is that big of a deal. If it is, you can also get atm cards for the account.