As a parent, you are one of your child’s most important teachers. From learning to walk, to tying shoes, to driving a car, there are an infinite number of important lessons parents can teach their children. However, an important lesson that many parents put off too long is teaching a child how to manage their own money. By teaching your child about banking at a young age, you are helping to set them up for future financial success. We have created this list to help you learn more about the benefits of creating a savings account for kids.
Set your child up for future financial success. Sign your child up for their first account today.
When Should You Open a Savings Account for Your Child?
There is no hard and fast rule when it comes to what age your child should be when they open their first account. Some parents will open an account for their child as young as age five and six, others might wait until they turn sixteen.
If you are unsure of when to get an account for your child, a good rule of thumb is to consider opening one for them when they have more money in their piggy bank than you feel comfortable allowing them to have easy access to.
What are the Benefits of Banking Young?
There are a number of benefits in teaching kids how to bank at an early age. Learning about banking when you’re still young can lead to better financial skills, habits, and attitudes.
Benefits to Banking Young Include:
If you wait too long to teach your children to bank, you’ll no longer have the time, or the access, that you had when they were younger. Whether they’re busy with school or extracurricular activities, hanging out with friends, or heading off to college, the older your child gets, the harder it is to set aside the time to go over banking with them.
Teaching them at a younger age means having more access and more time to offer them supervised lessons on banking. This way you don’t have to risk your child growing up without any banking experience, hoping they don’t make any avoidable financial mistakes.
Save for Future Expenses
This might be a no-brainer, but the earlier your child saves, the more money they’ll have later in life. The money they receive for birthdays, chores, watching the neighbor’s dogs, or from summer jobs, all adds up. So by the time your child turns 18 and can have a bank account of their own, they have a decent amount saved already. Those savings can eventually go towards funding bigger ticket items like a car or college.
The Younger Learned, the Easier to Understand
Like everything in life, the younger you learn how to bank, the easier it is to catch onto. If your child learns to bank when they are younger, they are more likely to be comfortable handling their own finances when they’re adults.
Teach Important Life Lessons
Banking teaches children about responsibility and respect for money and their belongings. It’s easy for kids to spend money that isn’t theirs, but when they have to spend their own money, suddenly their perspective starts to change. Instead of gifting items to children, let them save enough to pay for it themselves. Explain to them what a budget is and help them learn how to make a budget for the things they want.
This is not to say that your seven-year-old should start paying their own way in your home, but if there is something special they want, let them save for it and earn it themselves. Offer them opportunities to make a little money, through chores, that can be put towards whatever it is they want to buy. This encourages hard work, patience, and responsibility, while fostering a respect for both money and material belongings.
Protect Them from Future Financial Trouble
Everyone has made financial choices that if they could go back, they would do differently. Helping your children learn from your mistakes, and a few of their own, will help them from making large financial mistakes when they are adults.
How to Teach Your Child to Use Their Account
Once you sign your child up for an account, the next step is teaching them to use it. There is no specific lesson plan, the best approach is for you to judge what level of understanding and access is right for your child. But if you need some ideas, here are some banking activities you can do with your child.
- Show them how to track their banking online
- Teach them how to make withdrawals and deposits both in the bank and at an ATM
- Explain interest to them and point out when their account has earned interest
- Teach them what a budget is and show them how to make one
- Map out a plan for how much they can realistically save every month
Spend, Save, Give
A great way to teach your children about saving is the “Spend, Save, Give” method. This way of financial planning divides the money your child gets into three categories: money to spend, money to save, and money to give away. The “Spend” category is cash that can be spent on a purchase right away, or can be put towards a purchase they’d like to make in the future. The “Save” category is money to be saved away, not to be touched until your child turns 18. The “Give” category is money donated to a charity of some kind.
Separating your child’s money into these three categories can help teach them the importance of saving and planning, all the while reminding them of the importance of giving and caring for other people or causes that are important to them. Keep a chart with your child to help them track the money in each category.
Sign Your Child Up Today
Help to set up your child for financial success by signing them up for a Union Community Bank Minor Statement Savings Account. These interest bearing accounts are available to children under age 18 with zero monthly fees. It’s a great way to introduce your child to banking and money management.