Savings account
Age 6+A bank account meant for storing money you don't want to spend yet. Usually pays interest.
At a glance
A savings account is a bank account designed for money you don't need to spend right away. It typically pays interest, has slight friction to access (usually no debit card, sometimes a small monthly transfer limit), and is meant to be a step removed from the everyday spending account. Pairing a savings account with a checking account is the classic two-account adult setup.
Example sentence
"Your savings account pays 5% interest on whatever's inside."
Why this matters for kids
A real savings account with real interest makes abstract saving concrete. Kids who watch their balance grow on a real bank statement, check a real banking app to see real interest accrue, and feel the psychological satisfaction of an account that says their name on it have an entirely different relationship with saving than kids who only fill jars at home. The bank account is "real" in a way the jar can't quite achieve. Beyond psychology, a savings account introduces structural concepts that matter for adulthood: the difference between checking (everyday) and savings (held), interest rates, statements, transfer limits, monthly compounding. Each of these is a small concept in isolation but together they make up the basic architecture of adult money management. Kids who have lived with that architecture since age eight or nine don't flinch at it as adults; they've been using it.
How to teach it
Open a custodial savings account in their name. Many banks offer no-minimum, no-fee kid accounts (Capital One Kids Savings, Alliant, Ally — comparison-shop for the highest interest rate). Transfer their physical save jar into it once they're consistent enough that the deposit feels meaningful. Set up automatic transfers if the bank allows: a portion of every allowance moves to savings without anyone deciding. Check the balance together every month — show them the interest line on the statement, even if it's pennies. For older kids, run the comparison: a high-yield savings account at 4.5% APY vs a checking account at 0.01%. Same money, vastly different growth. That single comparison is the foundation for understanding why adults use multiple accounts. Around age 13-14, introduce the next level: explore Roth IRAs (yes, kids with earned income qualify), CDs, money-market accounts. The savings account is the gateway; from there the whole world of banking and investing makes sense.
Common misconceptions
- A savings account is only for big amounts. Even $20 in a savings account is doing the lesson. Don't wait for a "real" balance.
- All savings accounts are the same. Interest rates vary 100x between the worst (big traditional banks at 0.01%) and the best (online banks at 4-5% APY). Shopping rates is a real adult skill.
- You can't touch the money in a savings account. You can — there's usually just slight friction (transfer to checking first). The friction is a feature.
Related terms
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