Banks offer savings accounts designed specifically for children. These accounts offer children an opportunity to learn about how banks work, and they also make it easy for children to save money. You may begin to save money for your child using this type of account. However you may want to switch your savings for college to another account as soon as you have the minimum to open a higher yield savings account. Here are five advantages for having your children open a child’s saving account at the bank or credit union.
1) There is no minimum balance required for children’s savings accounts. Many banks do not have a minimum that must be met before interest begins to accrue on the accounts as well. This can be encouraging to children, because they begin to see money added to their account, simply because it is in the bank.
2) It will help your children to become familiar with how a banking account works. Many banks still offer passbook savings accounts. This means that your children will learn how to record deposits and withdrawals, before opening a checking account.
3) Your children should receive a statement monthly or quarterly. This is an excellent opportunity for you to teach your children how to reconcile a statement to their account. It is fairly easy to reconcile a savings account.
4) Once your child has a job, she can begin making deposits and withdrawals on her own at the bank. This is one more step to financial independence.
5) You are teaching your children to save money at an early age. By depositing the money they will learn to plan for future purchases (which includes a trip to the bank to access the money). This is one skill that will benefit them for the rest of their lives.