How to set your kids up for financial success – Part 3: The best bank account for kids

In Part 1 we discussed the ‘soft skills’ behind financial success to teach your kids. In Part 2 we went over some tactical tips including building their credit score and saving for education.

facade of historic stone building with ornamental wooden door
Welcome to the adult world of money!

Opening a bank account for your minor child

In the US, a person must be an adult (18+) to have a bank account in only their name. However, minor children can often have their parent or guardian open a joint account with them. (Check with your state, as this apparently depends on state regulations as well as what individual banks or credit unions offer.) Opening a bank account with your child’s name on it is a great way to introduce your child to the concept of saving, interest, and later, investing. Plus, I think it helps make them feel like a responsible adult to be able to, say, walk into a bank and deposit a check from Grandma, write a check to pay for something. When they’re high school-aged teens they can move on to direct depositing their part-time job earnings and using a debit or ATM card responsibly.

So, what bank account to choose? Many banks offer accounts tailored for children and their parents. The first major decision you should make is whether you want them to open a bank that has physical branches or an online-only bank like the ones I recommend.

Physical banks for young kids

Maybe I’m old-fashioned, but even though I try never to set foot in a physical bank if I can help it, I think there’s value in teaching your children to use the expensive relic that is traditional banking. If nothing else, being comfortable in adult institutions is both fun and an important part of growing up. So, if your child is pre-high school, I recommend opening an account at a good physical bank with a local branch near you.

If you use a physical bank (still? :)), then check there first if you like them since it’ll be most convenient for you for your kid to bank where you do. Washington residents should try BECU for kids. (I hate their web technology, but they–like most credit unions– have good incentives and low fees and friendly service.) Credit unions in general are a fine choice if you need an in-person bank for no-fee, moral banking for kids and adults alike.

Nationally, Chase seems to be a more honorable Big Bank than the incompetent Bank of America and the outright-fraudulent Wells Fargo. You can open a Chase kid’s savings account when they’re 6 – 17, or a teen co-owned account when they’re 13 – 17.

Online banks for working/spending teenagers

Once your child is old enough to have more responsibility over their own spending, and especially once they’re earning their own money, you should move them along to the best kind of bank they can have, which means an all-online one with low fees, high automation, and a good interest rate on savings.

I have so many clients still using awful banks like Bank of America or Wells Fargo for the simple reason that– in their words– “it was the first bank I ever had”. Don’t let this be your child.

Ally Bank is probably my top online choice for adults, but as of writing they do not allow minors to be joint account holders.

Capital One— which I use and recommend– offers a Kid’s Savings Account as well as a Teen Checking Account that comes with a debit card. Go with them when your child is ready for direct deposit + a debit/ATM card!

What to tell your kids about banking?

Explaining how checks, deposits, and interest work are all good things to do. Additionally, talk about avoiding overdrafts (make sure your child’s account either has overdraft protection off so with auto-declines in place, or take advantage of setting up free savings transfers that many banks and credit unions offer at no cost.)

Teach them to save up for a big goal like a large purchase using allowance or other gifted funds when they’re young. When they have incomes of their own, teach them to always put aside some portion of it for their futures. When they have earned income from wages, help them open up a Roth IRA.

[SUSPENDED] File for student debt relief in 3 minutes at today!

UPDATE as of Nov 2022:

Due to lawsuits over Biden’s student debt relief efforts, you can’t currently apply. You can still click the link below and hit ‘Subscribe’ to follow the prompts and get an update from the guv’ment when you can apply later.

If you have student loans, you can now file for debt relief in just a few minutes with your personal information at

The main requirement is that you have loans that qualify* (most people do) and have income under $125 K as a Single filer or $250 K as a Married Jointly filer. File today if you have student loans and cross your fingers!

*From :

But when it comes to which student loans qualify for relief, it gets a little tricky. All government-held federal student loans, including undergraduate, graduate, and Parent PLUS loans, are potentially eligible for relief. This would include Direct federal student loans, as well as FFELP loans that are in default or already administered by the Education Department. Private student loans and — following an abrupt policy change last week — most commercially-held FFELP loans do not currently qualify.

5 more spooky audio plays for the Halloween season

low angle view of man standing at night
Shining a light on forgotten horror classics

Last October I listed 12 of my favorite Halloween/horror audio shows, but here’s 5 more that I’ve discovered since. You can find all of my Halloween media recommendations– plus more horror fun– here.

  1. Two patients in a mental asylum become part of a deranged experiment in this Dimension X radio play from the 1950s.
  2. In the Peoria Plague, a radio broadcast describes a zombie-like outbreak in a factual War of the Worlds-style radio play (here’s a 1968 remake of Welles’ classic as a bonus) from an Arizona station in the 1970s.
  3. Adventure into the Himalayas to hunt the abominable snowman in this 1953 radio episode of Escape.
  4. Those with access at their libraries to the Overdrive/Libby collection can find this excellent BBC production of British horror author M.R. James’ very creepy stories. Also on Amazon’s Audible and other audio book providers.
  5. Here’s a BBC radio dramatization of a classic ghost story from Bram Stoker, author of Dracula, about a student who rents a haunted home. It’s called The Judge’s House.

How do Washington State’s PERS pension plans 1, 2 and 3 work?

Washington State public sector employees such as those employed by the University of Washington are generally part of the DRS pension plan system. There are three PERS plans to choose from. The DRS has details on PERS as well as ALL WA state public retirement programs here.

In case you want more detail or want to check if anything I’ve written is out of date or wrong, please refer to the PERS Plan 1, 2 and 3 links from the link above, or watch a pre-recorded webinars.

DRS Plan 1 / PERS 1

Plan 1 is a ‘defined contribution’ plan, which functions similarly to a 401k or 403b plan that you might’ve had in the private sector. See my advice in PERS 3 for what investment option to choose. (Spoiler: pick a Target date fund that matches your age at 70.)

DRS Plan 2 / PERS 2

A purely ‘defined benefit program’ which is what most people think of when they hear the word ‘pension’. Your employer contributes a specific amount on your behalf, and you also contribute. Currently your contribution rate is 6.36%. Check the latest plus more rules on how PERS 2 works here.

You have to have at least 5 years of service (see ‘Service Credit’ definition below under the PERS 3 section) and must be either age 65 or 62 with 30 service credit years to get the full pension benefit. Your pension benefit is calculated like so:

2% x service credit years x Average Final Compensation = monthly benefit


Let’s say you work 23 years and the average of your highest 60 months of income (AFC) is $5,400 per month.

2% x 23 years x $5,400 = $2,484

When you retire, you’d receive $2,484 per month.

See PERS 3 info below for how AFC is calculated.

DRS Plan 3 / PERS 3

Plan 3 combines both a defined benefit plan like Plan 2, funded solely by your employer, and a defined contribution plan funded solely by you. For the employee (your) part, you must choose when you first enroll in the plan whether to contribute (pre-tax, like a 401k) based on the options from 5% – 15%. Once you make this choice, you cannot change it unless you quit and start at a completely different employer that also offers DRS Plan 3.

What investment option should I choose for my defined contributions?

I recommend choosing one of the Target date retirement funds that matches the age you turn 70. For example, if you were born in 1970, choose the 2040 fund. These funds are low-fee and fool-proof in the sense that they automatically rebalance you and adjust your asset allocation between riskier (stock) and less risky– but much lower expected growth– investments like bonds & cash.

How is my DRS Plan 3 benefit calculated?

For the defined contribution piece, your monthly lifetime benefit is based on the following formula: 1% * Service Credit Years (SCY) * avg final compensation.

Service Credit Years are calculated by summing up service credit months. You get 1 Service Credit month (SCM) for every month that you work 90+ hours in. You get 1/2 a SCM for 70 – 89 hours, and 1/4 for 1 – 69 hours. 12 SCMs = 1 Service Credit Year. For most people working at least 0.6 time, you’ll earn 1 SCY per year as you’d expect from the name.

Average Final Compensation here means “The Average Final Compensation, or AFC is the average of your 60 consecutive highest earning months in your career. This could be at the beginning, middle or end of your career. DRS uses your AFC income information to calculate your pension amount. For high income public employees, federal law limits the amount you can contribute toward retirement and limits the benefit calculation. See IRS limits.” [Italics mine.]


Let’s say you work 23 years and the average of your highest 60 months of income (AFC) is $5,400 per month.

1% x 23 years x $5,400 = $1,242

When you retire, you’d receive $1,242 per month in pension income. Remember, your investment income [from the defined contribution part of your PERS3 plan] is calculated separately.”

When can I retire?

To avoid an ‘early retirement’ reduction in your benefit, you must wait until age 65. You also must have either 10 years of service credit OR 5 years + 1 of those years earned after age 44 OR 5 years earned in PERS 2 before 6/1/2003 to qualify for ANY pension benefit, regardless of if you wait until 65 or take it early. Scroll down to ‘Early Retirement’ to read those details in the link just below:

From WA state:

You are eligible for a pension retirement when […] you have achieved one of the following:

  • 10 service credit years
  • Five years of service credit with at least 12 months earned after age 44
  • Five service credit years earned in PERS Plan 2 before June 1, 2003

Full retirement

Full retirement is the earliest age you can retire without any reduction to your retirement benefit. PERS Plan 3 members are eligible to retire at age 65 if they are vested.

Early retirement

You can withdraw from your investment account at any time after separating employment. For your employer-funded pension plan, specific rules apply for when you can retire. You can retire as early as age 55 with a reduced benefit if you have at least 10 service credit years.”


If you retire [early, before age 65] with between 10 and 30 years of service credit, your monthly benefit is reduced by a factor that is based on your average life expectancy. The reduction is greater than if you retire with at least 30 service credit years.

See this link on the ‘factor’ reduction in your PERS 2 or 3 pension by early retirement age. For example, if your full retirement monthly benefit was supposed to be $1,000 and if at early retirement age 60 your factor is 0.6190, then that means you’ll only receive $619 per month instead of getting the full $1,000 if you wait until age 65 to start taking your pension.