Bank Accounts For Children Teach Money Management Skills

The economic recession has caused many people to start considering a bunch of new money practices to help them make their funds stretch. Some people are electing to put more money aside for savings, so they can prepare themselves and their families for anything adverse that could possibly happen in the future; while other people are attempting to pass their wise ways onto their children. The best way to pass your money saving techniques onto your kids is to get them one of the new bank accounts for children that are available in many financial places.

By getting your child their very own account at a prestigious bank, you will be able to show your child how to manage their money at a premature age. In fact, most adults that practice bad money management skills complain that if their parents would have taught them the value of money at a younger age, they would not be in the current predicament that they find themselves in.

It is plausible to locate a banking institution that gives parents the ability to open up a special account for their child. Parents have the ability to choose the type of service that they want their banking institution to provide to their little one. Internet bank accounts are a great option.

There are several different account options that a banker will go over with a parent that is interested in opening up a personal account for their child. A lot of institutions will actually pay decent interest rate returns whenever a child opts to open up their own personal savings account. While, other banks may allow a child to have a checking account that does not charge any transaction fees.

Even though most banking institutions do not see a childrens bank account as a valuable asset for their empire, most banks understand that parents are trying to teach their children of the value of money, so they can prosper in the future. In most accounts that are given to kids, the interest that the kid gets will be paid out to them on an annual basis, as opposed to an adults account that receives its payment once every quarter.

Opening up a private account for your child is actually a simple process to go through. The first thing that a parent will need to do is select an account for their child that they believe will accommodate their needs and the needs of their little one. Upon selecting an account, the parent will need to fill out an application for the type of account that they are interested in opening.

The banker will ask for proof of identity from the parent when they are opting to open an account for their child. The best proof of identity is going to be either your child’s passport or their birth certificate. As long as you have these two articles, a banker should not ask for any more information.

The amount of money that must be deposited into the account in order for it to be opened is extremely minimal whenever an account for a child is being opened. Once a child turns thirteen years old, a parent can elect to transfer ownership of the account solely over to their offspring, if they decide to do so.

Teach Kids About Money With Savings Accounts

At some point in their childhood, nearly all kids receive money. They may get a birthday check from a relative from time to time or it may just be their regular allowance. No matter where the money comes from, it’s a given that most kids want to rush to the store and spend it right away. Many parents want to help their kids learn to save money. This is why it’s a good idea to set up a savings account for kids to keep some of their money in.

One of the benefits to a child having their own personal bank account is learning how to be responsible with money. It would be easy just to allow a child to do whatever he wants with his money. But the vast majority of kids would choose to spend it immediately, probably on something that won’t matter to them in a few months. A personal account will teach the child the upside to saving, showing how the money that is saved will grow with each deposit, moving toward a larger goal. Fortunately it’s pretty easy to find free bank accounts for kids.

Children should be allowed to handle their own money, whether it’s giving coins to the cashier to buy a pack of bubble gum or going to the bank with a deposit. When children have his or her own savings account, it is not tied to the parents. The child will be able to see how much money he or she has without having to subtract the amount that is actually the parents own savings.

Children also have an advantage to learning math skills when they have personal bank accounts. When money is invested into an account, it begins to accrue interest. Kids will be able to calculate the annual interest on their balance and do the math to see if their figure matches the bank’s. If they withdraw funds, they’ll see what that does to the balance as well as the interest earned after that point.

Awareness of money is also a bonus to a child having a private account. Anyone who wants to give money to a child, whether it’s a grandparent, aunt or uncle or other friend or family member, will have to make a check out to the parent if the child doesn’t have a bank account of their own. Then the parent gives the money to the child, making it seem like the money is from the parent, especially if the child is very young. If the child has their own savings account, they can go to the bank to deposit Grandma’s check.

Personal accounts also allow children to have a broader realization of what is going on in the world. A child with their own savings account will be better able to relate to financial information they hear. This allows parents to have discussions with their children, who can then become more empathetic to people in different financial situations.

Children’s savings accounts are also beneficial because it allows control of a child’s own financial destiny. Their own choices about depositing and withdrawing money affect how much money they have. As they see what their actions in the past have done, they’ll incorporate that information into their future decisions. Deciding whether to buy that video game or save up for something bigger is practice for adulthood when they’ll make similar decisions on a larger scale.

One of the best things a parent can do to help their children learn how to manage money well is to set up a bank account for them. The practice that a child gains saving and managing money will serve him well when he becomes an adult. He’ll already know how to be responsible with money.

How To Choose A Savings Account

Understanding the types accounts available will assist one in how to choose a savings account. For liquid cash, one should decide on the type of that will offer the best return for the amount deposited. There are benefits and advantages to each one, they include passbook or regular accounts, certificates of deposit, interest earning checking, money market accounts and funds and U. S. Savings Bonds.

The passbook or savings account is the most easily accessible type used for daily needs. The advantages of this type is that they are FDIC insured, money is easily withdrawn at any ATM machine and they have zero to very low minimum balance requirements. The disadvantage of this type is that they have the lowest interest rate. This is a popular children’s bank account.

Certificates of deposit have a minimum period of 6 months where ones money must be deposited. The advantages of this type are they have a higher rate of interest that is guaranteed for a set amount of time and they are FDIC insured. The disadvantage is that there is a penalty for early withdrawal and there is a minimum balance required.

Interest earning checking is great for people who write checks on a regular basis. The advantages are that they have a guaranteed interest amount that is higher, checks can be written against the balance and they are FDIC insured. The disadvantages are that a minimum balance is required, if not met there is a service charge and there are costs associated with check banking.

Money markets are offered through credit unions and banks. The advantages are they have higher interest rates than fixed deposits and passbook accounts although they are not guaranteed. Checks can be written against the balance, usually around three a month and they are FDIC insured. The disadvantages are they require a higher minimum balance than other types of savings, if they go below the minimum balance no interest is earned and there is a service charge. The minimum balance is between $1,000 to $2500 and three to six withdrawals are allowed monthly.

Money market funds differ from money markets, but are similar in that they both have the same market rates but different in that money market funds are not FDIC insured. The advantages are they have higher interest rates and 3 checks per month can be written against funds. The disadvantages are they require a high minimum balance, there is a service charge and interest is lost if the balance goes below the minimum set. The minimum balance is between $1,000 and $2500, there are three to six withdrawals allowed monthly and there is no FDIC insurance.

The U. S. Savings Bond is somewhere between a passbook account and an investment. The advantages are that there is a guaranteed return on the initial deposit and a higher interest rate, interest is exempt from taxation and it is FDIC insured. The disadvantage is that the rate of return is lower than stated if redeemed within 5 years.

Based upon whether one can leave their money in an account for a period of time or if they need access regularly will determine how to choose a savings account.