Did you learn anything about how to build savings for children when you were a child? Regardless of your answer, you should understand the importance of this lesson.
Whether it’s because you’ve observed in practice how much the absence of this type of knowledge hinders the development of a healthy financial life in adulthood.
Or because they were able to apply the teachings given by their parents to build more solid finances, in any case, teaching finances to your children is essential.
The problem is that not everyone knows how to do this correctly, feeling completely lost as to how to transmit such knowledge.
You don’t have to keep racking your brains to find a practical way to teach your kids how to handle money.
In this post, we will give you some guidance on what to do to teach your children to build savings in a more dynamic way.
Where to save funds in a children’s savings account?
Whether it’s time to set up a personal savings account or set up a savings account for children, where to store the money is a big question.
Where to keep this money? Well, some people keep it under the mattress, in the cookie jar, in a piggy bank, among other places.
In some ways, it’s better to save money in any of these places than to never save money at all, but we’re not looking for something to plug a hole.
Here we are looking for something practical that can truly solve the problem, which is why it is important to explore children’s savings accounts.
Currently, several banks allow you to open accounts for your children, where, depending on their age, you will have full control, partial control or all control will be with your children.
These bank accounts are completely adapted so that children do not end up in debt, after all, they are still learning how to use financial services.
Children who have contact with this type of account from an early age tend to deal better with banking services later on, as they already understand how everything works.
At what age can a bank account be opened?
The minimum age to open a bank account can change completely from bank to bank, and the same changes with regard to the type of bank account.
Bank accounts for teenagers can generally be opened from the age of 14 or 16, although in some cases the ages may be lower.
However, there are bank accounts that are truly focused on children, where parents manage the accounts until the child is old enough to manage their own account.
In the second case, there is no minimum age for opening a bank account, only a minimum age for the child to be able to manage it.
How to open a savings account for a minor?
When opening a savings bank account for a child, documents from the child and parents will be required, so you can start preparing the paperwork.
In general, documentation from both parents is not necessary, just one of the legal guardians is enough to request the opening of the account.
Just as you don’t necessarily have to be the child’s father to be able to open this bank account.
If you are legally responsible for it, you will be able to submit the account opening request at most banks.
In some cases, the request is made remotely, while in others you can carry out the entire procedure without leaving home.
Therefore, before anything else, it will be important that you contact the bank to understand how to open an account.
Can I manage my child’s savings account?
Children do not yet have a proper understanding of how to handle money, which can make the idea of a bank account very strange to them.
However, when we consider that you will be by her side managing the account, it all starts to make more sense.
The level of control you have over this child savings account will depend on the age of your child.
The purpose of these bank accounts is for the child to gradually have more contact with financial services and products.
Therefore, until a certain point, your child will be able to buy with a debit card, but will have to wait until they are a little older to have access to credit.
The same applies to account control; for a good period of time you will be an assistant in administration, while over time you will become just a supervisor.
Who can open a savings account for children?
Generally speaking, anyone who has legal custody of a child can open a savings account for them.
Therefore, whether you are a godfather, uncle or even an older brother who has legal custody of the child, know that opening an account is possible.
It is also worth noting that not all children have both parents present, which is also not an impediment to opening an account.
Therefore, only one legal guardian is required to apply for opening a savings account for a child.
Regarding the documents, they are practically the same as those requested to open your bank account.
Although there are some exceptions, such as proof of stable income, you do not need to have a child who already has a job for them to open an account.
What is the return on a children’s savings account?
The return on a children’s savings account depends largely on several factors, such as the financial institution.
Therefore, before opening a bank account for a child, do not open it at the first financial institution you find.
Do some research online to find the most suitable option for optimal performance.
However, it is important to remember that a children’s savings account is not an investment like a conventional savings account, so be careful when analyzing it.
After all, it is also important that the child account is easy to manage, as your child needs to get used to it easily.
Therefore, the yield on a savings account can be important, however, it is not the only factor to take into consideration.
Is there a fee for investing in a children’s savings account?
Generally, not, after all, not even adult accounts have been introducing monthly maintenance fees lately.
And since a savings account has a number of fewer benefits, such as the inability to apply for loans or credit cards.
There are no reasons that justify charging an annual fee or other maintenance fees.
Therefore, it will be unlikely that you will need to incur any expenses to keep the child’s savings account active.
However, having a free bank account is not mandatory, so it is important that you pay attention.
Otherwise, you may end up applying to open an account with expenses, thinking it would be free.
What happens to the savings account after the child reaches adulthood?
If we are talking about the type of child bank account opened in a conventional bank, the account will become a regular account.
So, if until they come of age your child does not have access to various financial products and services, such as loans, financing and credit cards.
Once you come of age, everything you have in your bank account will be available to your child.
This could mean that he will have a normal experience as a regular bank account holder.
However, this usually implies a series of advantages for those who have had a bank account since childhood.
Such as creating an adequate financial history, or simply knowing how to manage your money, already having a good amount in your account, earning interest through savings.
Still regarding savings, once you reach legal age, new investments will be available and can be explored to obtain a higher return.
Conclusion
Opening a savings account for your child is a fundamental step in teaching them how to manage money.
After all, one of the best ways to learn is through practice, so do some research to find the one that best suits what you are looking for.