As great as USAA is, there might be an even better savings account out there for kids. Affinity Bank offers a savings account that pays 10% on the first $500. The only catch is that the parents need to have a checking account with Affinity. I haven’t opened an account for any of my kids yet, but I’m planning to soon.

Part of the savings equation I would include is towards 529, ESA, or education bonds. You want to teach her financial goal planning, so having her save towards her education, spending money, donating, and retirement (see next bullet) gives her a good foundation once she gets out on her own.

Once she is old enough to have a job, then I would start matching her savings towards 529/ESA/EDU Bonds and/or Roth. http://www.fairmark.com/rothira/minors.htm

another option through USAA if you have the deposits (you will have to check if your accounts could be bundled with your daughter’s account for qualification purposes in order to qualify her. For spouses they can be) is to open an Asset Management Account (AMA) account under her name. AMA earns more, plus gives .5% on debit card charges, unlimited check writing, the standard USAA ATM fee reimbursement, etc. Checks may be outdated by the time she grows up, but it is also another important part of the equation given many people’s propensity to overdraw and bounce checks. I remember we learned how to write checks and balance a checkbook in elementary school.

@paidtwice - We’ve kind of thought the same thing. She could earn additional money for doing specific things above and beyond that we all agree to. She’s too little right now, I think, for that yet.

@Thryah - It’s definitely an experiment for us. I’m not sure how it will all go; just hope I don’t mess it up too bad. I’ll certainly post about it again, I’m sure.

Also, on the allowance tied to chores thing. I agree with what you say here, as a youngster who has gotten allowance tied to chores, it just makes you feel tied to those, and having a brother and sister, you didn’t want to do what theirs were. Also, it started out strong and fizzled out, as we just weren’t keeping up with it. Your idea seems like a good one, as it’s more of an honor system, in that she’s getting paid, so when she gets older and thinks about it (or maybe now, i remember some pretty advanced thoughts from a young age) she’ll want to do the things so that she can feel she’s earned the money. That right there is part of why I feel good about having a job finally, I feel like I’m actually earning something, not just getting a gift (although gifts are always nice too, heh).

Hope it goes well, looking forward to hearing more about how this develops.

I will probably tie mine to work at some point. Not chores but extra work maybe. I dunno. Still thinking

I think it’s absolutely awesome that you’re starting to teach you daughter about money issues from the get go! The saving, charity, budgeting, matching ideas all sound good to me…. and I really love the notion of chores as “responsibilities to the family”, but I wonder about what the whole allowance thing teaches to begin with (I also never had one as a kid). Doesn’t an “allowance” teach entitlement (aka welfare) versus earning (work)? Granted, at 4 years old, there probably aren’t many options for work… and delaying the start of money lessons until it is is also probably not a good idea either… but at some point in the process I would think it might be good to start making the transition between the two…. just a thought