How To Start a Savings Account for a Child

It is never too early to start saving, after all “a penny saved is a penny earned” goes that age-old adage I’m sure everyone has heard at some time or other! I’ve heard many people rue the fact that they never had any financial education or someone who gave them good advice on how to manage their money. Experts also say that lack of any financial education is the reason most Americans find themselves in deep debt today!

Therefore, it is not only common sense, but also very financially savvy to start teaching your children all about money at the earliest age. A starting step would be to open a savings account for your child/children today and start putting away some money for their future. Inculcate the savings habit in your children and they will grow up to be financially knowledgeable individuals. Read on to know how to start a savings account for your child…

Search for banks that offer special savings accounts for children

You can start with your own bank or check out any other banks in the local neighborhood. Most banks can and do offer some version of a children’s savings account with differing interest rates and APYs. Additionally, you can search out local directory listings for such institutions, and if all else fails, there is always the Internet!

Compare savings accounts and terms offered

Once you’ve found a list of suitable banks, check out the various types of accounts offered to get the best possible terms and returns. Pay specific attention to interest rates, minimum balance to be maintained, any charges and penalties and deposit and withdrawal limits. Make your final selection after you’ve deal-shopped and initiate the account opening process.

Opening the account

The minimum qualifying age to open an individual account is 18; therefore you can open an account in your child’s name only with an adult signing up as ‘trustee’ or ‘guardian’ along with the child. Both the guardian and child are required to sign the account opening forms. Also provide details regarding Social Security numbers, date of birth, etc. Once the forms are completed and submitted, fill out the deposit slip and pay the opening amount. While completing the account opening process, explain to your child what you’re doing and why, so that he/she understands the process and how it works.

Make savings a habit

Encourage your child to deposit money into the savings account regularly. Pocket money/allowance, cash gifts and that money earned from a paper route or mowing the lawn – all of this can be saved and deposited into the account. Show your child how the money is growing as it earns interest and more money is deposited as your child grows older. By the time your children become adults, the account should have accumulated a decent amount of money, which can be used for higher education or even a paid holiday after some intensive studying!

As you can see, opening a savings account for a child is a simple and easy process. Exposing your child to the savings option at the earliest age will help them grow into financially-savvy adults!