There are many ways for parents who want to teach their kids about money and financial literacy. One of the best things to do is to help your child open a savings account. Many banks and credit unions offer special savings accounts for kids that can be opened under the child’s name. In addition, opening a children’s savings account can help your child learn more about managing money, saving for the future and other aspects of personal finance, starting from a young age.
Before you open your child’s savings account, it’s important to do your research, shop around for rates and features and decide what the most important priorities are for having savings account for your child. Several states have laws around allowing minors to open savings accounts; check with your local financial institutions to make sure this option is possible where you live.
As Forbes states here are a few of the top considerations to keep in mind when looking for a children’s savings account.
What Are Your Goals for Your Child’s Savings Account?
Why do you want your child to have a savings account? There are several good reasons:
- To help your kids learn more about money and finance. Having a savings account can help your child learn about the magic of compound interest, different types of financial accounts, and how to manage money in everyday life.
- To help your children learn more about banking. Your child can learn how to do online banking, deposit a check, and more.
- To help your kids develop the habit of saving their own money that they receive from an allowance, getting paid for chores, or a part-time job. If you are trying to teach your child how to manage their money, how to save a certain percentage of their income, or how to use the money for different financial goals, having a savings account can make all of this more real for them.
- To save money for a specific short-term financial goal. For example, if your child wants to buy a new video game console, they could use their savings account to save for these specific goals.
However, having their own savings account can help your child. They can learn how to set financial goals and make decisions about how to use their money responsibly. Talk with your child about their savings account before you choose a bank or credit union. Make sure your child is old enough to understand and be curious about saving money.
See what questions they have, and use that conversation to guide your search. Having a real savings account of their own can help your child feel special and grown-up. You may even inspire them to learn more about finance and develop better financial habits at a young age.
