Quick Guide For Your Kid’s First Bank Account
By now, you know the significance of creating a plan for your finances. Budgeting helps a lot with your plans. Although you’re not a pro, you can still manage it perfectly fine.
But what people usually miss is teaching the kids about planning and budgeting. Educating them while they’re young helps them build a brighter future.
There are several ways to save and plan to spend for the children. One of the best ways to do it is by creating a bank account. It helps young ones to steer toward a sound financial future.
Don’t know which bank to choose?
Let this quick guide help you open your kid’s first bank account.
Decide On A Bank
Always involve your child in financial decision-making. Consider their opinion about the bank they prefer. Provide your input to find the best suitable bank for them.
Also, give a visual comparison of other available banks. Sometimes, an institution with a fantastic interest rate has notorious customer service.
Furthermore, look over the online banking functions. Older kids can use a smartphone to manage their money through an app. Shop around banks that have this feature.
Check The Location
When choosing for your kid’s first bank account, consider the same bank as yours. This way, it is convenient to coordinate visits with your child.
But what if your financial institution is not within the neighbourhood? Frequent bank trips would be challenging for them.
Children will love the idea of having their bank account. Help them reach their financial goal with less hassle.
Look for a neighbourhood bank; probably, somewhere along the familiar route of travel. Or maybe inside a local supermarket.
Review The Fees and Requirements
It’s the same thing when it comes to opening a bank account. You should make it a habit as well to look for some reviews like reading the small print when opening an account. Some institutions charge fees for inactive accounts. Others have a limit on small deposits.
Search for an account that has no monthly maintenance fees. It is best to know the minimum balance requirements too.
There are some accounts that hands a free savings account tied to your current account. Ask them what happens if you transfer your account to another bank.
Keep in mind that you’re teaching kids in money management. Be an excellent example that learning about the fees and requirements beforehand is a must.
Find Out The Starting Age For A Bank Account
The kid’s age matters when opening their first bank account. Also, the requirements vary.
A baby’s bank account may start from gifts of money. And it does not usually include a long list of documents.
An older child’s bank account entails deposit and withdrawal activities. They may put funds in then take it out to buy a toy or clothes. Requirements like identification are necessary.
A teenager’s bank account works differently. Sometimes, they have spendings beyond your knowledge. Also, kids this age may prefer to link their accounts to a checking one.
Talk to your kids about how they will use their accounts. It helps in narrowing down your selection of bank type and account requirements.
Perks Of A Current Account
Typically, banks offer a current account for kids aged 11 to 18 years old. It is a bit restrictive compared to current standard accounts.
Here, a kid will have the privilege of his/her own debit card. Be mindful that these cards have low limits of withdrawal amount per day.
The feature is advantageous for children. They gain the responsibility for organizing their finances wisely.
Nevertheless, don’t forget to supervise their actions. Talk to them and allow them to open up about their spending habit.
Understand Savings Account
For your kid’s first bank account, a savings account is the first choice. However, you must assist your child in choosing from the different types.
Regular Savings Account
It is the best bet when teaching kids to save money. The features of this account encourage young ones to be responsible in money management.
A regular savings account requires your child to make monthly deposits and fund withdrawals. These activities may help lower the interest rate.
It is a commendable type of savings account. The program steadily boosts your child’s bank balance.
A fixed-rate account does not teach your kid about saving money. But, it does not allow them to take out cash without incurring a penalty fee.
If children manage to comply, they will surely see guaranteed returns. Maintaining the balance fixes the interest rate for a certain period.
Instant Access Savings Account
Older kids are more active in saving and spending. If you want your kid to have convenience, this is the best choice.
An instant access savings account has a safety feature. Banks usually have limits on the number of withdrawals in a year.
It is beneficial for parents and children. You are sure that kids will not overspend their funds on sweets and socializing.
When choosing a savings account, always ask about your child’s preference. Ask your child what he/she wants to get out of it. Also, read the small print on specific accounts. It ensures you’re trusting the best finance facility for your kid’s first bank account.
Ask Programs For Children
Often, banks have services available to cater to children. Consider checking it out when you shop around.
Some financial institutions start with piggy banks. They give to kids to start collecting their coins. Also, they have a free coin counter in the lobby. The program is an excellent first step in teaching your kids about saving.
Other banks permit children to go behind the counter and see the vault. The program encourages your kid to trust the bank. It helps kids visualize where their money goes.
Don’t be shy when asking about these extra services. These programs are your greatest ally in teaching financial management for kids.
Learn About The Interest Rates
Above all these tips, don’t ever forget about the interest rates. It is a principal concern when opening your kid’s first bank account.
Explain to them its significance. It is like storing your money and earning some at the same time. It is easier to explain if the account is interest-earning.
Furthermore, compare banks to one another. Usually, they vary in interest rate structures. Find the most beneficial for you and your kid.
Financial goals are essential to adults as it is to children. Help your kid build a good foundation by opening his/her first bank account. Seeing their name on a savings account inspires them to save more until they are adults.