Q: Why open a savings account for my child? Is this something I should do now or later? Is it difficult to open a savings account for my child?

A: All of these questions have simple answers. You will find that it is very easy to set up a savings account for your child.

At what age did you open your first savings account? I was 8. Mom took me to the bank up the street (a C&S Bank just to let you know how old I am). I felt like a big boy. I was doing something that only happened in Mom and Dad’s world. I felt cool!

We deposited the checks that I had received for my birthday from my relatives (you know, the $5 ones you get from your aunt in Texas in the Sponge Bob birthday cards). I was now, somehow, more grown up. I had an account at a bank. I was saving money.

As a direct result from those early experiences and with help from my parents, I developed a respect for money. I learned about interest and my money growing like a tree (that’s the way dad explained it to me). I learned about being able to buy things, and if I did, how it made my money go away and how hard it was to replace that money.

Wouldn’t it be great for your child to learn these important lessons now rather than later? It is easier than you think. Most banks offer a minor savings account, where you, as custodian, control the account until he reaches age 18 (your individual state laws determine the age of majority).

Every bank is different, so I suggest that you call your bank or personal banker to research the specific requirements to open an account, the fees and any minimums to fund or maintain an account. For most banks, you will need the standard information for yourself to open a regular savings account, plus the child’s date of birth and Social Security number. Most minor accounts have no minimum balance requirements, no deposit requirements and no fees. Most accounts will have an ATM card available if desired. And CDs can be purchased to increase the interest earned.

Why put the money in an interest bearing savings account versus his or her piggy bank? Here is a simple lesson in compounding interest. You have a newborn child. Let’s assume as soon as she receives a Social Security number, you go to the bank and open a savings account for her. You deposit $25 at the end of each month for the next 17 years and earn 5 percent interest annually. How much would your child have on her 18th birthday? The answer is, roughly, a cool $8,013. That’s a lot better than the $5,100 you would have if you had put $25 per month in a piggy bank. Ahhh, compounding interest. It’s a beautiful thing.

Please do not confuse this with saving for college. That should be done in a 529 plan or with another qualified college-specific savings tool. This is saving for a first car or that high school graduation trip to the Bahamas. This is for teaching financial responsibility and how to manage your money before your child goes to college.

The earlier you start saving the better. You get your child off to a good start, saving money and teaching him good financial habits.

Chris Shadburn is a financial planner. Contact him at cshadburn@finsvcs.com.