Every parent eventually has to help your kid figure out what to do with his or her money. For me, that was about age 7, after a few lost teeth and some birthday $20 bills from grandparents left my daughter with a handful of cash that I found scattered around her room.

So now what? Open a bank account? Or just go with a piggy bank? I say...neither!

Let me explain.

I've already written the full rant, so here's the short version: a piggy bank pays 0% interest, can be raided by a sibling with a butter knife, can't automate anything, is clutter, and runs on cash that nobody wants to deal with any more. Coins, even. Yuck.

The deeper problem is what it teaches. Or more precisely doesn't teach. And that is that money should earn more money. A kid staring at $23 in a ceramic pig figures out that there's no reason not to raid it, because the money isn't doing anything in there.

Because a real bank account has the same problem, with more paperwork. Put $50 in a kids' savings account and you'll earn maybe a dime a month if you're lucky. (I'll save you the calculator: that's one NeeDoh every seven years or so. More on NeeDohs below.) A real bank also comes with minimum balances, statements, a branch, and a debit card that will be lost inside 90 days. All of that is real-world stuff worth learning eventually. At age 7 it's just friction.

The parents provide the bank, using The Parent Bank! You hold the money, the app keeps the tally, and you pay the interest. The kids have accounts, they can check the balance whenever they want (on their own device, read-only), and when they buy something I pay for it and debit the account. Optionally configured allowance shows up automatically every two weeks (your age in dollars, if you want a formula). Grandma's birthday $20 bill goes to me, and I then deposit $20 into The Parent Bank account. No pig, no cash, nothing to lose under the couch.

And the important part is that I pay interest. A lot of it. When my kids first started saving, I paid 50% a year on the first $100 or so. (Yes, 50%. My reasoning is here. Short version: at 5%, a kid with $50 earns 20 cents a month and learns nothing. At 50%, they earn about $2 and learn everything.)

Here's what that looks like in practice. One of my daughters, somewhere around age 8, had a thing for NeeDohs. If you know, you know. If you don't: it's a squishy stress ball, roughly $8, it comes in every color, and the point seems to be owning all of the colors. (A NeeDoh is this generation's Koosh ball ... but I digress.).

So there we were, in the toy store, and despite already having 2 (or 3?) NeeDohs, she considered buying another. With a piggy bank, why save money that won't grow? Just buy yet another NeeDoh!

But she had a Parent Bank account! I could see the wheels turning...if she bought the NeeDoh, she'd make less "magic money" next month. If she didn't, she'd make more, and could probably buy two NeeDohs later. 

Sitting with that tension, between the thing you want now and the money that grows if you wait, is more or less the entire subject of personal finance. Many adults never quite get comfortable with it. A piggy bank or a 0% savings account can't teach it, because there's nothing on the other side of the trade. But the Parent Bank can!

And indeed, she skipped the NeeDoh this time around. Which is a good thing, because after a few weeks, the fad had faded (see what I did there??).

Around age 6 or 7 is when both of mine started caring about money at all, so that's when their accounts opened. The Parent Bank carried them until their financial lives actually changed, which in our house meant a first real paycheck at 15. That's when a checking account finally starts to make sense, and that's Part 2 (coming soon). Eventually they graduate from The Parent Bank entirely (Part 3, also coming soon).

But if your kid is 7 and you're eyeing a kids' savings account: don't. Retire the pig, be the bank, pay an absurd rate, and watch a small person discover that money can make money. It's a better show than you'd think.

- Matt, founder of The Parent Bank