It’s never too early to begin a child’s financial education.
One of the ways you can help children learn about the value of a dollar, as well as delayed gratification, and overall money management (while also squirreling away funds for their future), is by establishing a savings account in their name.
Doing so typically involves opening a custodial account or a joint account that’s managed by you but belongs to the child. Here’s what to know about opening this type of savings account for a child and some of the factors to consider when taking this step.
Why should you open a savings account for a child?
Opening a bank account for a child can have immediate and long-term benefits. As already mentioned, there’s the obvious learning experience that comes with teaching your child about money management—and specifically about saving money. This education lays critical groundwork for their financial growth and journey.
“Research has shown that the road to financial well-being can be taught from a young age by our guardians,” says James Morgan, vice president of savings and deposits at Capital One, retail bank. “One of the best tools to teach kids the importance of finances is helping them open their own savings account.”
In addition to the conceptual value and long term financial health benefits associated with establishing a savings account for your child, taking this step also provides opportunities to have regular money chats and creates invaluable learning moments.
“It opens the door for important conversations and real-world scenarios about the basics of money—such as explaining interest and how it accrues,” says Matt Gromada, managing director, and head of youth, family, and starter banking, at Chase. “Second, it gives your child a sense of independence and freedom, providing opportunity for real-life experiences and learning.”
And that’s still not all. There’s yet another benefit. Having a…