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.