It’s important to explain to your children the difference between saving their money in a real bank versus a piggy bank.
The big difference, of course, is that in a piggy bank their money will sit there, whereas in a real bank, their savings will earn interest over time.
You can explain interest with a simple example, such as:
‘When you save money in a bank you’ll earn interest on your money over time. The interest rate is a percentage of the total amount in the account. For example, if you have £100 saved at a yearly interest rate of 10%, you’ll earn £10 on top of your money if you leave it there for a year’.