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Children typically receive monetary gifts for birthdays and holidays from aunts, uncles, grandparents and parents.

While many kids would immediately spend it on a toy, Christopher Hess, branch manager at Middlefield Bank in Beachwood, and Tatiana Miller, assistant branch manager at Heartland Bank in Gahanna, suggest setting up a bank account for cash gifts.

“When you look at savings accounts in general, what are they for?” Miller asked. “They’re for saving, planning ahead and showing how money can grow over a period of time. I believe it is important for children at a young age to understand the importance of savings, especially during the holidays.”

When you look at the holidays, of course children want to spend any money they get right away, Miller said, and they can do that if they want. But, older family members should see it as an opportunity to teach a child about the importance of savings “because it will affect them in the long run as they get older.”

When explaining why their money was placed into an account instead of given to them outright, Hess said adults can tie in the concept of saving in a bank account to waiting for something “worthwhile.”

“If you’re in line for an ice cream cone, remind them the result is a treat they really want,” he explained. “Saving is similar. You save for something you’ll want or need later on. With older kids, help them think of savings in terms of goals achieved over time. For instance, they may want to plan for purchasing their own car or help with college costs. Holiday time is perfect for starting this process because it is the most likely time of the year that children will receive gifts of money.”

Involving a child in the account set-up process makes a difference over just doing it for them.

“Call your bank in advance for an appointment and have your child carry in the necessary information,” Hess said. “Teach them about their Social Security Number and what it means for them. Some kids are thrilled to participate in a business meeting when they’re center stage. It can also help a shy child.”

Hess said family members should ask if their bank can give a tour. Some allow children to take a peek at the vault or safety deposit boxes, which are “like treasure chests.” It never hurts if tellers offer a piece of candy after transactions, he added.

“These experiences make the bank feel welcoming and enjoyable, which helps a banking habit stick in the future,” Hess said.

Having the child involved with account creation and management also teaches them the value of money, Miller said.

While there are many adults who don’t understand the importance of savings and struggle with debt, starting a child early gives them a footing into controlling their financial future.

“For me, I had an account at 10 years old,” Miller recalled. “I was fortunate enough to understand the importance of saving from a young age, and I graduated from college and now I’m on my way to getting a home before the age of 30. So, savings accounts build towards a future where you understand the importance of building finances and saving for your financial future.”

When keeping an account for a child, family members should motivate children to continually put their money into an account.

“One thing about children is they see toys and things on TV and then they automatically want it,” Miller said. “As parents, we’re so prone to just buying something for them. That’s what parents do – we’re supposed to care for our children, buy them things and make them feel loved. But on the other side of it, it’s exciting for children to see that money grow and buy it themselves when they can afford it on their own with their own effort. When the next holiday comes around, they can tell people, ‘Hey, I got this for you with my own money.’”

Hess said, “Incorporate a stop at the bank to deposit allowances, earnings and gifts as part of your family’s regular routine. More broadly, remember you’re modeling financial behavior all the time, whether you intend to or not. Talk out loud about your spending and saving decisions. Identify ways you save at the grocery store and point out when something is a splurge. All of this helps children learn the value and uses of money.”

And setting up an account for children is relatively easy, Miller noted.

“It’s easy, and people are concerned about keeping a minimum balance or funding it frequently and you don’t have to,” she said. “It adds some relief to them a bit. A lot of adults don’t have savings accounts until they’re older and they look back and wish their parents did that for them.”

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