Opening a bank account for your child is an event that’s often overlooked, but it’s important to help tomorrow’s leaders learn how to manage their money and finances well.
Developing good money habits early on will keep them on the right path in the future.
Knowing when and where to open a child’s bank account puts them on the road to lifelong financial success. Here are a few tips when looking to get your child’s first bank account started.
How to Know When to Open a Child’s First Bank Account
There isn’t a set-in-stone rule for when a child should set up a personal bank account. A general rule of thumb is that once they have extra money, it’s time to sign up for their own savings account with a trusted bank. This could be as early on as infancy if you plan to deposit some savings, or not until they begin to accrue extra funds from birthdays and holidays. Unless the child in question is making a regular income and spending out on business expenses, there’s no need for a checking account until later.
What to Look for in a Savings Account
Choosing the right savings account with the right bank is crucial for children to see their savings take off and grow over time. This reward is what will encourage them to continue saving in the future. Look for institutions that offer the following:
- Maintenance Fee Free – Because most children’s savings accounts aren’t going to be huge, it’s important to use a bank that offers no maintenance fees. This way, regardless of the amount of cash in the account, the balance will always be going up if no money is removed.
- Zero Minimum Balance – Again, most children aren’t going to begin their savings with a large amount of money. Using a bank that doesn’t require a minimum balance will allow them to save small amounts and work their way up as they’re able.
- The Higher the Interest Rate the Better – Savings accounts generally offer higher interest rates than checking accounts, which is another great reason to begin with a savings account. Choosing one with a higher interest rate is a great way to get the most bang for small bucks as this money is likely going to be in place until the child reaches the age of 18.
- Online Accessibility – Keeping up with one or two personal accounts is difficult enough so having access to online banking for an extra account is a no-brainer.
Use Daily Learning Experiences
Don’t forget the power of regular learning through daily chores and tasks. While kids sometimes receive money as a gift, working to earn it is part of the financial process you’ll want them to learn. Apps like Homey help parent teach financial skills through doing chores and earning regular allowances. It’s a great motivator for kids to not only save money but learn new ways to earn it.
Setting children on a positive financial path begins with teaching them to save money. This can be made fun and easy by utilizing the proper bank and type of account. Doing so allows a child to watch the cash they stash away to grow and multiply and teaches them this important financial necessity for adulthood.
Tags: apps, banking, chores, finance, kids