Saving money is an important lesson, and learning how to manage money for children may start small – but if your child is ready to move beyond the piggy bank and to open an account, then you want to make sure to find the right one. There are multiple things to consider when opening kids savings accounts, and finding the right one will help ensure that your child gets the best account.
The first thing you will want to keep in mind is the location of the bank. Many parents elect to have their children use the same bank as themselves, but if that isn’t convenient you will want one close by so that children can easily deposit money or make a withdrawal without you having to go out of your way. Some schools may even be contracted with a bank so your child can make deposits at school.
When shopping for the right bank, find out if there are fees or minimum balances. Often for minors, there are less stringent requirements, but you will need to know the amount to open the account, and any fees associated with it. A child’s account often doesn’t generate enough money to justify fees.
Interest rates are also a consideration, especially if you want to provide an incentive for children to save. Interest rates can vary considerably from bank to bank, and you want to be able to explain simply how much your child will earn by saving over the course of the year.
Certain banks offer savings programs for children. If your child responds to incentives, find a bank that is kid friendly. Some programs include special kid ledgers, or a free piggy bank to let children put money in. Use these as teaching tools for your child to make them better at saving.
Decide ahead of time what the goal of saving is for. Every child needs to know why they are saving. Have a specific goal that is attainable before opening an account, such as saving for a special toy or a bike. Once your child reaches their goal, allow them to withdraw their money and see the result of planning and saving.
When your child is ready to open an account, understand that some children are intrinsically more saving oriented than others, but the lessons apply to all children. You might find your child never wants to make a withdrawal, and that is ok too.
Once you have selected the bank for your kids saving account, find out whether you as the parent will need to sign for any withdrawals. You should be able to have access to your child’s funds in case of an emergency, just find out if you will need to be present for every transaction.
Your child might surprise you and themselves with how fast those little deposits add up – and it might even inspire you to save more too. There’s no way you can go wrong with that decision.