Every parent wants what is best for their children by setting up a foundation for future financial responsibility and security. One way to establish a secure future is by saving money for the future. Setting aside money for a college fund, housing fund, and even a wedding fund is familiar to most parents. Grateful when they are grown, it teaches very little about saving money themselves. With children understanding the concept of money from kindergarten, establishing money habits at a younger age is vital. Introducing the concept of money on what paying bills, depositing checks, and using debit cards at the store entails is an excellent place to start. However, for a child to fully grasp financial transactions opening a savings account with an investment financial institution is necessary. Here are significant vital reasons to set up a savings account for a child.
1. Understand Basics
There are many payments made by parents for the everyday smooth functioning of a family. Start by pushing them to leave the piggy bank, go for a bank account, and open an account to ensure that the foundation is set correctly. To aid the child in grasping the concept of bills, show them what each payment is for, be it for mortgage or water and electricity bills. The moments are sure to resonate with the child in preparation for the future.
2. Grow Money
Children who are yet to be taught that money has to be earned believe that money can be given at any time, regardless of the amount asked and the reason for it. By opening a savings account, the child will appreciate the growth of the money they have deposited. It’s a positive reinforcement as they learn patience when they see their money grow. It also teaches that not all money that comes in their possession has to be spent. Use account statements from your savings account to show how the money grows. However, you can opt for a bank that offers children’s savings passbooks to see real-life transactions on the growth of their money.
3. Financial Independence
After opening a savings account, your child will be handing money they have for safekeeping in their savings account. An additional lesson learned is that they can save enough money without the need to ask you to buy whatever they desire for them. By having to wait for the time until the funds mature, the child will understand that earning money takes time and usage has to be responsible.
4. Future Foundation
Financial education is the most important type of education your child can learn at a young age. With your child learning about savings, deposits, withdrawals, and interests, they understand more about saving for the future. Take the opportunity to teach them about current accounts, college savings, mortgages, and retirement accounts.
With many banks tailoring accounts specifically for children, opt for services with a bank that will take time to take children through the process of saving. Consider a financial institution that also offers options on the type of accounts available for children to help you plan the future with them. It’s good to note that no child under 18 years can legally own a bank account, and you have to co-own the account with them.