My son currently has one interest in life: different methods of transportation. He is 2 years old in August and completely amazed by the various wheeled ways we humans get around in.
Whether it is taking a ride on the John Deere lawn mower at the cottage, playing with his miniature Hot Wheels cars, watching (on repeat!) Lightning McQueen and Tow Mater in the Disney series Cars, or looking out the window at the passing buses, if it is on wheels he is a big fan.
This Christmas his great-aunt sent him a package that included a toy Greyhound bus. It was an instant hit. Unlike any of his other transportation toys, this one was also a piggy bank. It had been hollowed out and contained a small slit on the top to deposit coins. Best of all, it had wheels on the bottom and could be rolled from place to place.
Taped around the bus were a few coins to get him started. It didn’t take him long to figure out the concept, and by New Years he had fully bought in. Not only did he now understand what to do with coins – put them in his bus of course – but he was becoming a master at finding coins.
He learned quickly that Daddy, Grandpa and various uncle’s usually have spare change in their pockets. And by going over and patting their pockets with his hand, he could confirm whether this was indeed the case on any given day. Once he knew that the change did exist inside the pocket, he knew exactly what he had to do. Find his bus ASAP so that he could fish the coins out of the pocket and get them into his bus.
It wasn’t long before his bus began to get pretty heavy so one day Mommy planned an activity with him to roll all the coins he collected. They poured out all the coins, sorted them by amount and then began to roll them. In a few short weeks collecting coins he had amassed $17!
Now we needed to figure out what to do with his money. After all, he had worked hard for it, and it was only fair that he got to keep it. Not only that but since he had worked so hard to earn this money, I wanted his money to work hard for him and earn a little bit of interest. He wouldn’t be able to get away with this forever, so we had to make it count!
I soon remembered that when I was a little guy, my Dad had opened a bank account for me to stash away any money I came across. I was fuzzy on the details, but I recalled that occasionally, I would go into a branch to get my passbook updated and see that the bank had made a small deposit on my behalf.
After a brief investigation, we opened our son an in-trust account that we could make regular deposits to, and that would pay him interest on those deposits. Here’s how it works:
The account is very similar to a regular chequing/savings account. We pay no fee, get a certain amount of transactions per month (unless the balance is high enough then they are unlimited), and we can make deposits as regularly or infrequently as we wish.
In addition, the account will pay interest on any amount deposited. What’s nice is that since it is an in-trust account any taxable gains (which admittedly are none existent currently) would occur in the hands of my son. Because he makes no income, this is a non-issue for him.
Finally, the control of the account is in my hands until such a time as my son turns 18 or I deem him responsible enough to take control on his own.
I am happy that we got this figured out and set up when we did. Just the other day my wife texted me after another coin rolling day. This time he hit $90! At this rate, I will be asking him for a loan by next Christmas ��.
What it taught me though is that it is never to early to start showing children about money. While he still doesn’t understand all that money can do for him, he has us (his parents) to rely on to ensure it is taken care of for when he needs it. In our case it was an in-trust account. It was easy, accessible, and gets him started sooner than later.
Who knows? If he can keep up this rate, he may be able to retire before I can!
Wade Bedard CIM
Manulife Securities Incorporated