We’re all trying to save a bit of money for a rainy day; with the economy in a fragile state, making the most of your savings is essential. Why not set your kids on the right path early by opening a bank account for them?
Many of us had a piggy bank as a kid; we’d save our pennies and pocket money in there and watch it grow, then on a special occasion we would count it up and treat ourselves. Though children enjoy having a piggy bank and being able to see their pile of pennies grow, it is not the best way for them to save their money.
To encourage good money management in your kids early, try explaining the concept of interest to them. Tell them that their money will earn more money if they put it in a real bank account instead of a piggy bank. Once you have convinced them that a bank account is a good idea, you can start to look at the different options.
If your child is old enough, try to include them in the process of choosing which account is best for them. Obviously you will likely need to do the majority of the research and decide which account is best for them and you. Once you have researched and chosen a few you would be happy with, you can explain the options, in simple terms, to your child and let them have the final decision.
Explain to your child to be wary of banks that offer attractive freebies upon opening an account with them. Many children will be easily tempted with the idea of a free goody bag and won’t consider the long-term benefits of a bank account. A lot of the time, banks that offer these free gifts and perks do not offer the best interest rates.
Like a mortgage, you can choose to fix the rate of interest on your child’s account and like a mortgage, it is a calculated risk when deciding how long to fix the rate for. With some accounts with a fixed interest rate, it means your child does not have free access to their funds. If you want your child to be able to access their money freely, then an easy access savings account is an option.
Once you’ve decided on the perfect account for your child you need to open it. You can go into branch to do this, but with a child this can sometimes be a boring trip for them. You can apply for a bank account online which gives you the time and privacy to explain each step to your child and make sure the experience is a fun and enjoyable one.