Each year children receive all kinds of cash gifts. Gifts from grandmas, aunts, uncles, and even just close friends. These cash gifts are not much, and range from $10-20 per birthday, baptism, or other significant event. Some parents just cash these and put them in their checking account to spend like any other earnings. But there is another way to think about these funds and if you capitalize on it now, your child will be grateful. The main idea here is invest these funds but if you do this intelligently, you can get ahead of the game.

You should visit your bank in advance to check what type of accounts are offered for children. You may be surprised by the incentives on juvenile accounts, which banks view as PR expenditures aimed at creating the next generation of loyal customers.

After settling on a particular account, set up an appointment to attend with your child. Explain that a bank is a place you put your money until you need it. Your child should be old enough to have an understanding of interest - the money your bank pays you for holding on to your money - and you should explain that banks use that money for investing.

When you go together to the bank, let the bank associate sell your child on the account you have decided on. Your child will feel much more involved in the process. The account should be in your child's name and all the mail should be addressed to your child. Receiving bank statements like mom and dad is a source of excitement for most children. Some banks will allow you and your child to structure the savings account. This means you can split the account into two separate accounts: one for the future and one for spending goals.
On the same day as you open the account, go shopping with your child and select a binder, a congratulatory present. You will use this to organize your child's bank statements. Starting out with an organized record-keeping system will be valuable when your child gets older and has to grapple with taxes and accounting.

When the statements arrive, go through them together and explain the interest and any other numbers that may appear upon it. You can even check the math together to practice doing sums. On the same day as you regularly pay out your child's allowance, go together to make the deposit at the bank. This will help to reinforce the habit of saving before spending. It is also an excuse to spend time with your child. You can couple these trips with some positive reinforcement, such as a walk in the park or stopping for ice cream. Saving should feel good!

Congradulations and Keep Saving!!