Last week, my 6-year-old son told me that he wanted to empty all of the money from his piggy bank to buy a Gatorade. That set off alarm bells in my head. Granted, I encourage and enforce a healthy diet, so Gatorade appears to be a very special treat to this first grader... but surely not worth years of his savings?! Have I been asleep at the wheel in terms of imparting in him the understanding of the value of a dollar?
As someone who is always telling others that it is never too early to start talking to your children about money, I realized that it was time to up the practice of my preaching and kick-start talking about financial goals and the importance of savings. So, after a few hours on the floor counting loose change, we took the $27.53 he had saved in his piggy bank to the actual bank to set up his first real-life savings account. It was time for him to learn about the difference between buying a Gatorade and continuing to save toward the Star Wars Lego set he had wanted for more than a year!
In this new “found time” of staying at or close to home during Covid-19, one local trip you might want to consider is to your bank. Opening a savings account for your child is a great way to begin to teach money management skills, help them mature, and get them started early on a path toward financial independence.
Once the account is open, you can implement financial lessons on a regular basis. A good place to start is to teach basic banking terms such as ATM or interest rates. It’s also important for children to understand the importance of saving.
If your household is on a tighter budget these days, it is also a good way to help your child feel less uncertain about the stress and anxiety around money and have the opportunity to help be part of the solution by beginning to save money toward future expenses.
The bottom line is that financial education should start when your child is young so it becomes a normal part of day-to-day decision making and they can build financial literacy and confidence!
Here are some important considerations to take into account when looking at opening a bank account for your child.
Who can open an account?
Savings accounts for children typically give parents or guardians joint ownership.
How can I open a kids savings account?
It is relatively easy to open an account. In addition to making the required initial deposit (bring that piggy bank to the bank!) — other typical documents often required include:
- Proof of address
- Your picture ID (such as driver’s license) and Social Security number
- Your child’s Social Security number and birth certificate
Once you’ve opened an account, help your child to learn the best practices for managing money, like setting aside a portion of his allowance and the difference between short and long-term savings.
What should I look for when setting up an account?
As a general rule, the best savings account for kids should have few fees and low interest rates. Look out for options that provide no minimum balance requirement or monthly maintenance fees.
How can I make it a concrete, real experience?
Set up an appointment and take them into the bank with you to turn this into a real-world experience they will remember... If they are anything like my first grader, they will especially enjoy the lollipop they get from the bank!