Teaching your child financial responsibility early is one of the most vital lessons they can learn. Not only does teaching financial literacy help your child develop beneficial financial habits later in life, but it also helps them understand the value of money. Children who learn to save and spend money responsibly will benefit from these skills throughout their lifetime.
Parents and caregivers often wonder when the right time is to open a savings account for their child. While the answer to this question will vary depending on several factors, the short answer is that it is never too early to start saving for your child. You must decide how much to contribute and which savings account is best for your specific purposes.
Overview Of Child Savings Accounts
A child savings account is designed to save money for your child over time. You can open an account in your name as an adult and designate the funds for your child. Many banks, credit unions, and private lending companies have youth savings accounts designed to meet your needs. Some youth savings accounts require minimum balances and minimal deposits, while others allow for more financial freedom. You will need to determine your financial goals for your child’s savings account and find the fund that meets those expectations.
When Most People Open A Child’s Savings Account
A child’s savings account can be opened anytime between birth and 18th birthday. The earlier you open the account, the more you will be able to save over the years. Some child’s savings accounts accumulate interest, even a tiny amount over time. This means that even if you open a savings account and contribute a minimal weekly or monthly amount, by age 18, your child will have healthy savings.
However, it is never too late to open an account and help your child learn financial responsibility. If you take your child with you to open the savings account with their money and contribute money to the account as they receive gifts or funds from chores, they can watch the amount grow. As your child wants to make purchases, you can use the opportunity to discuss the option of depositing the money instead into the savings account. This will teach them to save for the things they want to purchase, interest accrual, and other critical financial skills.
Ideas For Contributing To A Child Savings Account
You can contribute in many different ways to a child savings account, including:
- Depositing a symbolic amount to welcome the child into the family.
- Setting up weekly or monthly transfers from your checking account of a specific amount.
- Depositing cash gifts your child receives for birthdays and holidays.
- Encourage your child to save and deposit the funds into their savings account.
By taking the first step of opening a savings account for your child, you are planning for their future and encouraging them to respect the value of money. Any time you start saving for your child, you set them up for a lifetime of financial success.