Although Americans are saving more now than they were a a few years ago, many are still living with high debt levels.
This is concerning because saving money and paying off debt is essential for financial success. Perhaps it’s due a lack of financial education for children in America, or the fact that many grew up without learning a good savings habit. Either way, the best way to get in the habit of saving is to get started early.
This is why some parents help their child open a bank account from a young age. But, at what age should you open a bank account for your child?
Any age may be the right time to open an account for your child. It just depends on the child’s understanding and maturity. If you are thinking about opening a bank account for your child, here are some things to consider.
Purpose for the Account
The type of account you choose to open for your child depends upon the purpose for which it will be used. There are accounts that allow you to make deposits throughout your child’s life so you can later gift them the amount once they reach a certain age. This may be a good way to give your child a graduation gift to help pay for college.
If you want to teach your child the importance of savings, getting them involved when they are a little older, like five or six, is a good idea. Then, as a teenager, teaching them about balancing an account and managing money is important. At this age, a checking account can be helpful.
Personally, my parents opened a savings account for me from the time I was a baby. They deposited money into the account whenever I’d receive money as a gift for my birthday and other holidays. Then when I got my first job as a teenager and had some bills to pay for my car and other things I wanted to buy, we opened my first checking account.
Building Good Habits
As mentioned, getting your child started early with saving is a good idea. Having them take their birthday money, chore money, allowance, etc. to the bank will show them the importance of saving first and spending last. They may even start to enjoy watching it grow.
You can also teach the importance of having money before you buy something. If they want the latest toy, have them pay for it and if they don’t have enough money, they have to save more in order to make the purchase.
Another idea to consider is having your children set aside some of the money they earn to be given to charity. This can teach the importance of tithing from a young age.
Teaching the Value of Money
The number one reason to create a savings for your kids is to teach the value of money. The world runs on money and your kids will already know this. By instilling the good habits listed above, they’ll learn to respect money and not abuse it. Having them work hard to save and spend wisely will set them up for better financial success in the future.
Saving money is a good thing regardless at what age you start your kids. Both banks and credit unions have youth savings accounts that can be helpful for teaching kids about good money management.
Teaching children to be financially responsible is the best way to prepare them for adulthood.
At what age did you open a bank account for your child? How are you teaching good money habits to your child?
Photo courtesy of: Brendan Riley