Shortly after I was born, my parents opened a savings account for me. They didn’t deposit money into it regularly over the years, but occasionally they did add to it.
Once I was old enough to have a checking account too, I had at least a few hundred dollars already set aside in savings. But, not everyone follows my parent’s example.
Some people open an account shortly after their children are born and save thousands for their future. Others wait until the child is a teenager and able to make and control money themselves. Still others do neither, preferring to let their child handle it on their own after reaching adulthood.
Clearly there is some controversy over the matter. Should you open a bank account for your child?
3 Reasons to Open a Bank Account for Your Child
1. Teaches Good Financial Habits
One reason you should open a bank account for your child is to teach them good financial habits. Keeping records, balancing a checkbook, and paying bills on time are not skills each of us is born with.
These habits must be learned. Teaching kids by example and hands on training is one of the best ways they can learn to manage money responsibly.
2. Provides for Their Future
Another good argument for opening a bank account for your child is simply to provide for their future. College, cars, and getting a good start in life all take money.
The only way to get money is to earn it, unless you inherit it from a rich uncle. But the only way to have it available for the future needs of your kids is to save it.
Opening an account for your child, therefore, gives you the opportunity to set aside funds for their future needs.
3. Helps Them Succeed
Helping your children get ahead in life and succeed is every parent’s hope and dream. However, you can make it a reality by opening an account and helping them learn and save for the future.
Teaching kids the value of money is not done through giving them everything they want and need. Instead, you must help them understand how much things cost. Let them be in charge of their money once they are old enough.
They may make some mistakes along the way. That is part of the learning process. By the time they reach adulthood, though, they will be successful at managing money by themselves.
How to Open an Account
To open a bank account for your child, talk to them about it first, if they are old enough. It also helps to give them some experience ahead of time with regular currency.
To give them some understanding of how money works, let them spend a little know and then for small purchases, such as gum or a small toy.
Next, you can go the bank and open an account in their name. You will probably have to include both your name and theirs on the account.
Requirements could differ from state to state but you may need a copy of their birth certificate or student ID. There could also be a minimum deposit amount you must meet.
What Age Should Your Child Be?
You can open a savings account when your child is an infant if you wish. After your child is older, begin teaching them management of the account.
If your child is a bit older and doesn’t yet have an account you can still help them sign up for one. Check with your bank to find out their requirements.
When to Relinquish Control
Most parents will give at least some control of the bank account to their child when the child hits a certain age. For example, a teenager or child nearing their teens may be ready to manage their own account.
Of course, there is not set rule on what age that is. It all depends on the maturity of the child and how responsible they are with money.
You may need to oversee the transactions they make until they are comfortable handing their affairs on their own.
Whether or not you should open a bank account for your child depends on many things. Your own finances likely play a role as well as the age of your child. However, clearly there are some good reasons to do so.
Do you think it’s a good idea to open a bank account for a child?