Are you reading this and wondering when was the last time you didn’t manage your bank account from a computer or your smartphone? If so, you may have never heard of a Passbook Savings Account. They aren’t as popular as they once were, so don’t worry if you have no clue what they are, but these retro accounts still have some great advantages, especially for children.
In the days of yesteryear, a traditional savings account was commonly referred to as a passbook savings account. The name was derived from the fact that tellers would record the deposits, withdrawals, and interest earned for account holders in a small booklet called a passbook. A complete copy of all transactions is kept within the passbook so you can easily track all of your deposits, withdrawals, and interest earned.
While many banks have done away with these accounts, passbook savings accounts still exist, and are now more commonly associated with savings accounts for children, though they may appeal to other types of customers as well.
If you are looking for a great starter account for your child, the passbook savings account is a fantastic option. They are an effective way to teach children about saving and banking in general. You can bring your child into the bank and they can see how the banking process works and watch their account grow. The early connection with money and paying attention to their account is a major part of helping them get comfortable with money later in life.
Passbook Savings Accounts also provide a great steppingstone to additional accounts. Opening a passbook savings account gives your children access to your bank or credit union’s communications, tools and apps designed to teach them about money. As your child gets older, money in the savings account can fund investment accounts that will help them understand stocks, bonds and the power of compound returns. For teens, it can be a place to deposit their paycheck and start using a debit card. It can lead to saving for a car or deposit on an apartment. But in any case, it can all start with a savings account.
Finding tangible ways to teach children about money is an important element of a child’s financial education. Early financial education about savings is especially important in a nation where so many adults report to not having adequate emergency funds. In fact, the Federal Reserve reports that 40 percent of Americans say they can’t afford to cover a $400 emergency expense, at least not without borrowing money or selling something.
The decision to save money is never a bad choice, regardless of which type of account you use to store your funds. For a complete list of all the accounts that Litchfield Bancorp offers, visit our website or stop into any of our local branches.
Assistant Branch Manager