It really is never too early to begin preparing for your child’s future and a savings account is definitely a step in the right direction. Starting a savings account early can help you manage events down the road like college, their wedding and other expenses. Older children can become involved in saving while learning the value of a dollar and how important it is to prepare for the future.
What is the ‘right age’?
Different people have different ideas about when to open a savings account for a child, but when it is all said and done, the correct answer is ‘now.’ It doesn’t matter if you have a newborn or if your child is 12 years old. Any step you make towards preparing for their future is a positive one.
Getting them involved.
When your child is around four or five years of age, they can begin to understand the concept of saving for the future. Take them to the bank and show them the vault, the tellers, even the security guards and explain the purpose of each. If you can, make at least some of your deposits at the bank and bring your child along. Let them be a part of it so that it is more real to them.
The ‘right’ account.
Once you have decided to open a savings account for your child your next step is to find the right type of account. Different banks offer different features on their savings accounts. Some charge fees, some do not. Some require a minimum balance or that the savings account be connected to a checking account. Do your homework and shop around. You want to find a great interest rate (something around 1.15% APY is ideal) and features that will help you save wisely for your child. While large banks are popular, you may find a more personal experience by going with a smaller, community bank.
Into the future.
As your child grows and matures you can provide more learning opportunities for understanding their financial future. Every child is different and you know your child better than anyone else, so take it at a pace that is comfortable for you both. Look for little lessons in your own life like clipping coupons or passing on that extravagant purchase so that you can save for something else. Let them see saving money in operation in your own life and they will be much more likely to do it themselves.