Cash gifts for kids: piggy bank or bank account?

When children receive Christmas or birthday money, parents ask themselves: piggy bank or bank account?

3 min read

It’s your child’s birthday! Their godparent is happily demonstrating how the fresh bank notes have no creases and how new they are. But what’s your little one going to do with the money? You’ve guessed it: crumple it up, rip it into a thousand pieces or draw on it. You’ll need to do something with money gifted to your child. But what? And is there a rule of thumb for the amount?

Children’s money

When a child receives money as a gift, it belongs to them but is managed by their parents. You are now their bookkeeper – and you’ll need to pay the money into their bank account or piggy bank.

Explain money

In their first few years of life, your child is too young to understand the concept of money. But as soon as they start asking about the subject, explain to them that you will be looking after their money until they are older, that it will be put into a savings account or a piggy bank, and what the money was given for.

Guide them

Let your child put the money into their piggy bank themselves or go to the bank and pay the money into their bank account together. If money is paid directly into your child’s account, use bank notes to demonstrate the cash equivalent. This will make the gift more real for the child.

Education or toys?

Speak to the giver about the purpose of the gift. Is it for the child’s future, their education or traveling? If so, then it’s better kept safe on an account. Or is the money for use in the near future, perhaps for an expensive toy? Then it can stay in a piggy bank and you can discuss what your child wants to spend it on. And if he or she is old enough, what about a thank-you card signed by both of you? Home-made cards are always appreciated.

How much should you give?

Just like with gifts for other occasions, there is no rule of thumb on how high the amount should be – this is at the discretion of the giver. However, even if the amount is very high, a small child will not be able to understand its significance. They will be unable to appreciate the amount until they can do basic arithmetic, have started receiving an allowance and know exactly how much their games console or semester abroad costs.

UBS’s educational principles

This article was written in collaboration with educator Marianne Heller, who has years of experience in teaching financial education and debt prevention programs for children and young people.

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