When children see toys advertised on television, clothes in a store or candy on the shelf, they immediately want them. They have no understanding that those things cost money. And if a parent says well honey, that costs a lot of money, children think that parents have an endless supply of money that simply appears magically out of their wallets. That is why it is important to teach children early about the value of money by looking into bank accounts for children.
Teaching children about money will help them make smart buying decisions, develop strong savings habits and show them that they can not always get everything they want the minute they want it. If they get a sense of the importance of buying things that you need, instead of things you want.
Start your child's financial education by teaching them that money is earned by working for it. No one is going to just give them money when they're adults, so do not set up that expectation now. Kids can earn money by doing chores around the house - cleaning bathrooms, sweeping floors, putting dishes away. There are household chores suitable for every age.
The first step in saving money is to get a piggy bank or something similar. Kids, especially younger kids, are very literal and concrete. Seeing physical money accumulate will get the point across better than anything you could say. If they want a toy or something that costs more than one or two weeks worth of allowance, show them how they can get it. They just need to put a portion of their allowance away each week until they've saved enough to buy what they want.
Once your child has a handle on the idea of saving cash at home, it's time to teach them about banking by opening a savings account. Many banks, both online and brick-and-mortar, offer savings accounts for kids. This gives them the chance to start an account without a significant minimum balance or fees that would wipe them out.
You should open the first account using both your name and the child's name, which indicates a custodial account. Make sure you provide the required forms of identification, as well as birth dates, both of your social security numbers and current address.
Go over the bankbook with your child and encourage the child to place the bankbook in a safe place. Many bank account representatives will take the time to go over all the steps with your child, such as the importance of accurately entering deposits and withdrawals, as well as dates and explanations. Of course your child will not remember this when it's time to make a deposit or withdrawal, so you'll need to walk them through the process again.
The key at this point is to keep it simple. Your child is not starting a checking account and does not need to know all the details that are involved with maintaining this type of account, at least not yet. Your child will stay encouraged about saving money once the bank statements arrive and the child can see the bank account grow. Some families also find that it discourages children from making unnecessary purchases because they want to save money. Opening a bank account for children can open their eyes to the importance of saving and managing money. All it takes is a little praise and encouragement from the parents to help build their kids financial future.
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