Your child might have some idea already of what a bank is and does from books or through television programmes. But if your son or daughter asks questions about banks, it might be time to set the record straight by opening a first savings account, according to www.nerdwallet.com.
Opening an account provides a glimpse into how banks work as well as gives your child a place to stash allowance and birthday money.
Here are the most important things to know about savings accounts for kids.
- Is my child old enough for a savings account?
Kids’ savings accounts typically give parents joint ownership. That means mom or dad can manage the finances until the children are ready to do that on their own. Because of that setup, your child probably won’t have to meet an age requirement to open an account.
A simple piggy bank will probably suffice for most children younger than six. But once that money starts accumulating, you will want to give it the opportunity to grow.
- Which kids’ savings accounts are best?
Before you open an account, take some time to find the best bank, credit or online-only bank for your child and you. Look out for the following:
No minimum balance requirement or monthly maintenance fees: Children should see saving as a good thing and not have fees diminish what they put into their accounts.
A good interest rate: At most national banks, savings rates hover around zero per cent, while some banks offer better rates.
Online or in-person access: Walking into a branch office is a good way to help your child become familiar with routine transactions involving their account. Your child’s online habits – even financial – can be important, too, so check for features such as monthly statements and controls on payments and transfers from savings accounts. You can teach money management and internet safety together.
Additional perks such as an Automated Teller Machine card: An ATM card can show your child how transactions work and how to withdraw cash when you are on the go.
- How do I open a kids’ savings account?
Opening a savings account for your child is not much different from getting a new account yourself. Once you have found a good bank, schedule an appointment to visit a branch office. When you go, double-check that you have your child’s information. (You will need the same information if you are opening an account at an online-only bank.) Children should also bring their piggy banks and school identification card, if they have one.
Encourage your child to put money in the account for the first time that day, and see if the financial institution offers candy or other freebies to reinforce the positive experience.
After putting money into your child’s savings account, start teaching your son or daughter how to perform basic banking tasks. Demonstrate how to use an ATM to deposit birthday or holiday cheques or money earned from chores.
Prioritising saving over spending is a valuable life lesson, one that takes time to learn. Opening a savings account for your child is one of the best ways to introduce that concept at an early age.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH.
Contact: [email protected]
(Visited 16 times, 16 visits today)