Choosing Savings Accounts For Kids

Most children will receive money at some point in their childhood. Whether it is a check from a grandparent or a prize from a contest, many kids will want to rush out and spend this money immediately. A good idea for parents is to pick from one of the many types of savings accounts for kids and set this up for their child.

One of the benefits to a child having their own personal bank account is learning how to be responsible with money. If children are handed money and are immediately allowed to spend it, he or she will get the instant gratification of something new but will not learn how to save for something bigger. A personal account will teach the child the upside to saving, showing how the money that is saved will grow with each deposit, moving toward a larger goal.

Another upside to children’s savings accounts is being able to have the child handle their own money, even in the smallest way. When children have his or her own savings account, it is not tied to the parents. The child will be able to see how much money he or she has without having to subtract the amount that is actually the parents own savings.

Children also have an advantage to learning math skills when they have personal bank accounts. When money is invested into an account, it begins to accrue interest. Children are able to see how much will be made from interest in one, five, or ten years, and will also see how adding or subtracting money from the account affects the interest earned.

Awareness of money is also a bonus to a child having a private account. If a child does not have his or her own account, a grandparent, aunt, or other relative who wants to give a monetary gift will have to make a check out to the parent. To the child, who doesn’t realize that the money was his or hers in the first place, a parent giving them money makes the parent seem like the source, rather than the gift giver.

Personal accounts also allow children to have a broader realization of what is going on in the world. When a child has a bank account, he or she is able to more greatly understand the financial news of the world. This allows parents to have discussions with their children, who can then become more empathetic to people in different financial situations.

Savings accounts are also beneficial because it allows control of a child’s own financial destiny. With every deposit or withdrawal, a child can see how the saved money is affected. This will provide a better sense of reality when deciding whether or not to make a withdrawal to get the hot new toy or keep saving for something bigger.

Setting up savings accounts for kids is one of the most responsible things a parent can do. When a child has his or her own personal bank account, a large step is being taken toward the responsibility and independence he or she will need as an adult.