The first type of children's account is one that you open when your child is very young. You periodically deposit money into that account, gradually building a savings nest egg for your child. If you start an account when your child is a baby, the compound interest rate effect should build quite a large amount of cash equity in the account. These savings, which are normally under the parents' or legal guardian's control until the child reaches legal age, can be used for many things. These accumulated funds can be used to pay for college, to buy a first car, and even as a type of financial insurance against the loss of the parents, in addition to any life insurance. In an emergency situation, these saved funds can be made available to the child immediately.

Another type of savings fund you can open for your child is to help teach the value of money and financial responsibility. When your child is old enough to understand the basics of money, go to the local bank or credit union and open a savings account together. The child should bring some money to deposit into the account. As the child earns an allowance or eventually gets a part-time job, he or she can continue to deposit money into the savings fund. The parents must set down rules at the beginning as to the purpose of the savings. The money might be designated totally for college, or maybe half is for tuition and half is for the child, and so on. The parents should control the bankbook so that the child does not withdraw all the money.

If the youngster wants to buy an item, he must learn how much work is involved in earning enough money to buy the item. Once enough funds are deposited into the interest-bearing savings fund, the child can withdraw the purchase amount to buy the item. Of course, the young person must promise to continue making deposits into the account so that it continues to grow over time.

Choose whichever reasons suit you best. Opening children savings accounts can teach young people financial responsibility and the value of a dollar.