Skip nav to main content.

Setting up your child’s first bank account

Often the question revolves around the appropriate age to open a kid’s bank account, but that depends more on the child than the policies of the credit union. The key to a youth savings account or checking account isn’t just about having money. It’s about learning how to save and spend it.

When you think your child is ready to have their own bank account, they likely ought to have an understanding of why they should have a bank account. Taking care of it throughout their childhood will help them understand how to use a savings account or checking account responsibly.

Your child’s first bank account

You may be surprised to learn that you can open a Youth Savings Account at Fitzsimons Credit Union for your child as soon as they are born.  By law, children must have an adult’s name on their account until they reach the age of 18, so at best, it’s a joint account. More often, these are known as “custodial accounts” with a legal guardian having access. But even if you are the only one depositing money, the goal of having a child’s account is likely not to make them independently wealthy by the time they are legal adults. As a parent, your first goal is to help them learn how to save money.

A child’s first account is often a savings account. Why? Well, in addition to learning how to save money, children rarely have a legitimate need to spend it, (assuming buying games and tons of candy isn’t “legitimate” in your view) — plus, as you know, spending is the primary function of a checking account. That’s why a kid’s savings account is a good starting point for learning how to handle money.

Get kids interested in saving money

If you open a savings account and you are the only one making deposits, it might be more challenging for a child to learn where that money goes.  By teaching your kids that a credit union holds onto and protects their money, they will better understand the value of putting the money into an account rather than a piggy bank. (We’ll get to earning interest once they understand the basics.)

When they are young and go with you to the credit union, they’ll watch you hand the money over to a teller and see that it’s no longer immediately accessible. The earliest financial education kids can learn is that money is limited and important to buy the items we want and need in life. The second-best lesson is helping them understand that banks and credit unions exist to take care of their money until they are ready to buy those items.  With a Fitzsimons Credit Union Youth Savings account, on their birthday month they’ll receive a birthday check from us.  Ages 2 to 5 receive a $5 check, while ages 6 to 12 receive a birthday check that matches their current age – for more details.

Engaging kids in the banking process will help them understand where the money goes. Let them hand the money over to the teller. Allow them to see the dollar amount on their receipt. For young kids, these tangible interactions make the process easier to grasp.

Let kids have some money, too

In addition to learning where the money is deposited, it’s also helpful to let them see how to come back and withdraw money. Therefore, another great step in the financial education process is to let kids experience withdrawing money themselves.

At first, this process won’t be for the purpose of spending money, but instead to let them know their money is always there and that it is safe.

One way to help a child understand this idea is to allow them to keep a small amount of money separate from each deposit. For example, when depositing $5, allow the child to receive fifty cents back. This can be added to the following deposit or saved in a jar at the house with other loose change. The idea is to help young children understand where their money is more readily accessible to them.

After each visit, be sure to let them see what their account balance is. The advantage of any deposit account is to grow your money in the account. Seeing that balance increase with each visit to the branch will help them understand the benefit of depositing money into a savings account.

Show kids how to spend money

Again, as you know, the idea of saving money is to watch it increase over time. But why is that important? As adults, we may be planning for retirement or building up an emergency fund, but it’s unlikely either of those buckets of savings is on your child’s radar screen. Even saving for college might be a bit over their heads at this point.

Regardless, saving up for a specific purchase helps a child learn that patiently collecting their money in a savings account over time will help them reach a goal. Develop a plan for a small purchase — say around $5 to $10. If they are making small deposits, they may think it is okay just to make the purchase and skip the bank. Consider instead letting them make the purchase once they reach a larger savings goal, like $50 or $100.

This will teach them the benefits of goal setting, as well as the value of not spending money as soon as they have it. Learning to practice patience and restraint can help them understand that it is a good idea to plan purchases and to always keep a safety net in their account — just in case something unexpected pops up.


Bank online together

With a child’s custodial account as well as your own, you likely have convenient visibility to transactions using online banking. As they see you use your debit card at stores, you can show them what those transactions look like in your own account, so they get a hang of how it works a bit faster.

Once your child understands the concept of depositing money, you can also show them how money can be moved from one account to another. After a visit to the local branch, let them see their new account balance online. Use our mobile banking app to move a few dollars to their account.

When reviewing their accounts, be sure to let them see any interest they are earning, too. Even if they are not quite ready to determine how the interest rate is calculated or what annual percentage yield (APY) means, seeing their balance grow should teach them the benefit of keeping the account with a community financial institution rather than at home in their piggy bank.

Being digital natives, it will be easy for them to make sense of the technology but teaching financial literacy to kids is really about helping them monitor their accounts and see the progress they are making.

Let’s get started

Start your child’s understanding of proper savings today.  Our Youth Savings account is here to help them understand the value of saving, earning, and growing their finances.  Plus, it rewards them on their birthday month as well.  Schedule an appointment with one of our representatives today to get your child started on the right direction of saving and financial literacy.


Credit:  Kasasa Blog