Teaching your children the value and fundamentals of saving is a skill that will prove beneficial as they grow into adulthood. Starting at an early age is perhaps the best way to instill in your child the importance of paying yourself first, as well as the value of time when it comes to personal finances.
Selecting the right type of savings account though can be easier said than done. Not only is convenience important when it comes to personal banking but the terms and conditions of bank accounts these days are things that must also be taken into consideration. Hopefully with some of the tips below you will be well on your way to teaching your child the value of paying yourself first.
Hopefully saving will become a new hobby for your child once they see how fast their money can grow. Although it is hopefully ultimately up to the parent as to how many times you are taking your child to the bank, proximity and convenience is still a huge factor when it comes to choosing the right account. Perhaps there is already a bank in the grocery store that you frequent or maybe one on the way home from your child’s school that you can use. If you are in the practice of visiting your personal bank, the easiest thing may be to open account at your personal branch.
Fees & Requirements:
In the quest to teach your child about personal finance, fees and fine print are definitely things that you should include in the educational process. The last thing you want is for your child’s hard earned money to be eaten up by fees. Many banks also charge fees if there is no monthly direct deposit or a minimum balance is not maintained. There are a number of other ways that banks have started taking fees so reading the fine print is definitely advised.
Type of Bank:
If your personal bank does not meet the needs for your child’s new bank account, a good new option that is popping up everywhere is the local credit union. Credit unions are member owned so the fees are typically lower and the fine print is few and far between. Other options such as online banks and mobile deposit are also available instead of the old fashioned brick and mortar banks.
Programs for Children:
Many banks will have special programs or accounts for children. Depending on the age of your child you may need to set up a custodial account. Letting the bank know exactly what the account will be used for will help you find the account that is best suited for you and your child’s needs. Depending on the bank, they may even offer special programs such as going behind the counter of the bank or seeing the vault where the safety deposit boxes are.
Perhaps the most important thing to be remembered when opening any account is to consider what kind of interest rate you are receiving. Teaching your child the power of compounding is much easier done when the interest rate is something nominal.