By: Coleen Smith
Submitted: 2011-12-18 19:21:58 | Word Count: 600
You explained the value of money to your children. They've earned money at home by doing chores. They've learned something about how much things cost. They've even learned to save some of their money rather than spending it immediately. Now it's time to take that piggy bank to a real bank and open a savings account. They'll deposit their money, watch it grow, and be able to purchase that special item they've been wanting.
First you have to find a bank that will meet your child's needs. If the bank you normally use doesn't have a special savings account for kids, then you might want to look for a different bank or a credit union. Most credit unions have lower fees due to the fact that they are member owned. There's another option out there that you may not have thought of because they're relatively new - online banks. This is one of the easiest methods of banking and you can keep an eye on the account from your own home.
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Look out for minimum balance requirements and monthly service fees. You should be able to find a savings account for your child that doesn't have either. You should also make sure they do not charge fees for inactive accounts. You need to get your child's savings account set up just the right way in order for them to learn what you hope to teach. There's no substitute for reading all the terms and conditions associated with the savings account.
Take you child's age into consideration when deciding what type of savings account to open. For a baby, you'll need a deposit only type of account. Older children will most likely want to withdraw funds occasionally. This account will be with your child for a long time, so think about how it will be used over the years.
Basically there are two kinds of savings accounts that you should consider for your child. There are old fashioned passbook accounts, and statement accounts, which are more similar to checking accounts. With passbook accounts, the bank will provide your child with a booklet where every transaction is recorded. At any time money is deposited, that amount is entered into the passbook.
Statement accounts are when your child is provided with a monthly statement of all account activity. It will show money that has been deposited, as well as withdrawn, interest that has been accrued and any fees that may have been charged to the account. You can opt for old fashioned paper statements, or you can receive the statements online.
Once your child has a savings account of his own, you will see his interest in banking and managing money grow. Some children will want to save every penny and not spend any of it. Some children will want to save up for a specific item they want to buy themselves. And some will deposit and withdraw like a revolving door. No matter how your child reacts to their new savings account, you will start them on the road to understanding the value of money and what it takes to earn it.
Kids can learn a lot about responsibility from having their own savings account. Make sure to get them involved and not just manage it for them. They will love to look over their bankbook and watch how the numbers change. It's also a good way to save money for the things that they can't buy with just one week's allowance or money from their birthday. Starting while they're young will help kids develop financial responsibility. And that's worth any price.
