Introducing a Savings Account Beyond the Piggy Bank

Ages 8-10: Bank on It

Help your kids open their own savings account. Of course, you can start saving on their behalf when they're much younger, and they probably have a wad of birthday cash stuffed in their sock drawer. But now they're mature enough for you to introduce them to how a real bank works. Even at this age, kids may be horrified to see their money disappear. It takes them a while to understand (and accept) that if they deposit a $10 bill, they'll get their $10 back -- but not the same bill.

Should you require your kids to save? That depends. Some youngsters hoard every penny and have to be forced to spend. You can always have them divvy up their allowance into pots of money for spending, saving, charitable giving, even investing. But if you don't want to take the trouble to parcel out the cash, a simple alternative would be to have them save a nice, round 10 percent, or tithe that amount to charity. And you can encourage kids to save by matching what they put aside -- your very own family 401(k).

Another strategy that works: Have your children save toward a goal, whether it's a toy or a new baseball glove. When they reach their goal, let them spend their money and enjoy the payoff for their efforts. Saving may be spinach and spending dessert, but as my youngest child, Peter, once told me, "Saving can be dessert, too, if you save for something you want."

Next week: Ages 11-13