April 18 2018 • by Deirdre Jannerelli • Saving
Parents want the best for their children, and helping a child to build a solid financial foundation should definitely be at the top of the parenting “to-do list”. One way to start paving the way for your child’s future financial stability is to teach them the importance of saving money.
Research has shown that children as young as three years old can understand the concept of saving and spending. Some experts even believe that our money habits become ingrained by the time we’re seven years old.
One way to teach your child responsible money management skills, is to help them set up their own children’s savings account. Here are some reasons to open a savings account for your child:
Many banks offer savings accounts that are specifically tailored to children, so you’ll likely have a lot of options to choose from. Generally, you should try to find an account that earns interest, and doesn’t have a minimum balance requirement or monthly maintenance fee. And keep in mind that children under the age of 18 cannot open a bank account on their own, so they’ll need a parent or guardian to act as a co-owner of the account.
- It helps them understand the basics. Teaching the concept of money to a child is not an easy feat, and it becomes even harder in today’s digital world. With parents paying bills online, depositing checks with mobile apps, and using debit cards at the store, it can be hard for children to really grasp what those financial transactions are all about. But, by having them fill up their piggy bank and physically bring it into the bank to deposit, you’re creating a teachable moment that’s sure to resonate with them for years to come.
- It teaches them to let their money grow. Kids get excited when they can see just how much of their money is accumulating over time. It’s a positive, rewarding experience, and can help them realize that it’s not necessary to spend money just because they have it. Some banks even offer children’s savings accounts with a passbook, which is a physical book the child can keep and bring to the bank with them. Every time they make a transaction, it’s recorded in the book along with their current balance. Having this kind of visual can be very helpful for children, because it allows them to see exactly what’s happening with their money. If your bank doesn’t offer a passbook option, you can use your account statements to teach a similar lesson.
- It fosters financial independence. By having and growing their own nest egg, children will learn that they don’t need their parents to buy everything for them – an extremely valuable lesson they can take with them into adulthood. And by using their own money to buy things, or save up for big ticket items like a cell phone or new bicycle, they’ll learn that money doesn’t grow on trees. When a child experiences firsthand the time and effort that goes into saving money, they’ll be less willing to blow through their hard earned dollars.
- It lays the groundwork for further financial education. As your child gets more familiar with their savings account, and learns how interest and deposits keep their money growing, they’ll have an easier time learning about other financial products and services. Once they understand how their own account works, they can learn about other savings vehicles like certificates of deposit, college savings plans, and retirement accounts, as well as the differences between a checking account and a savings account. This knowledge will help them as they grow into adulthood, and start playing a more critical role in their own financial journey.
At BankFive, our Nickels Savings Account for Kids makes saving fun while teaching children how to responsibly manage their money. Our Nickels accounts are available to children 12 and under, and every child who opens one receives a free ‘Nickels the Dog’ stuffed animal. We also give each child their own passbook so they can have a tangible connection to the money they’re saving. Any deposit large or small is accepted, and interest is earned on balances of $10 or more.
By opening a children’s savings account, you can help your child establish good financial habits, and show them that saving money can be fun. With their own little nest egg to build and maintain, they’ll be on the way to achieving their future financial goals.