January 30, 2024
Piggy Bank Vs Savings Account – What’s Best for Your Child?
Do you remember having a piggy bank as a kid? It was exciting to find a dime or a quarter and be able to stash it away in your own, safe place! How old were you when you took that piggy bank and brought it to an actual bank? What made you consider the difference between a piggy bank vs savings account?
Perhaps you were becoming a teenager or young adult, and your piggy bank was simply too full! Or, your parents encouraged you to move your money into a youth account. Either way, it’s important to note that times have changed, and helping your children put money into youth accounts should happen earlier rather than later.
When comparing a piggy bank vs savings account, you’ll want to consider your child’s age, how much money they have saved, what benefits a youth account should offer, and the difference between bank and credit union youth accounts.
When Should I Open a Youth Account for My Kid?
It is never too early. Seriously, the earlier, the better! The sooner an account is open, the more time there is to build interest on that money. It doesn’t matter if your child is 5 years old or just 5 months old.
Of course, that doesn’t mean you have to do away with the piggy bank just yet! Why not use both resources to harness money management skills with your children? You could make it a monthly ritual to sit down with your child to count the money in their piggy bank. Then when they reach a certain dollar amount, take a trip to your credit union to deposit it together!
How Much is Too Much Money for a Piggy Bank?
This question is obviously up for interpretation and depends on each person’s unique situation, but it’s important to consider how much safer money is when kept at a credit union rather than in a piggy bank.
For example, if your in-laws like to write a substantial check for your child on special occasions, you should be putting these funds into a youth account rather than stashing them somewhere at home.
When comparing a piggy bank vs savings account in regard to security, it’s a no-brainer. Funds kept in credit union youth accounts (and any other credit union account) are federally insured up to $250,000 by the National Credit Union Administration (NCUA).
The Benefits of Youth Accounts
Youth accounts provide a parent or guardian a means to educate children about financial wellness. Instead of just learning to save and put money away in a piggy bank, the child can begin learning how money should be saved and used as they transition to different stages of their life.
From formulating short and long-term purchasing goals, to planning for life after high school, a youth account provides an outlet to plan for each step of life.
By including your child in financial transactions (both in-person and online), you are providing them with important knowledge and skills they can carry with them into their adult lives.
In-person visits to your financial institution will show kids how to complete transactions and help them to understand why certain transactions are made.
Online banking is yet another powerful tool to aid in the growth of our youth’s financial well-being. Most school-aged kids today are very familiar with the online world and what it has to offer. With online banking, even younger kids can access and learn how to track their finances.
Why Choose a Credit Union Over a Bank for a Youth Account?
If you are a credit union member, you likely already know the answer to this question. Credit union youth accounts, like other credit union accounts, are secured up to $250,000 by the NCUA. Credit unions are also non-for-profit cooperatives, meaning your child will be considered a member and owner of the credit union, not just a customer as they would be at a bank.
Many credit unions offer to put the first $5 into a child’s youth account as a way of saying ‘thank you’ for becoming a member. They are also more likely to offer youth financial education services in their communities than banks are.
As a child grows into adulthood, they will have the benefit of already being a member, and will have access to financial resources they may not have otherwise. Credit union youth accounts open up doors to eventually grow one’s credit and be able to apply for loans and credit cards.
When you’re ready to compare a piggy bank vs savings account for your children, keep your local credit union in mind. They will provide a strong financial foundation with benefits that grow as they do.