A bank account is one of the best tools around for helping your child prepare for the future. On one level, a savings account is a way to build a nest egg for college or another worthwhile purpose. Many parents open savings accounts for kids as infants for this reason. But a bank account is even more valuable as a vehicle for teaching kids how to budget and save and why these are important skills. Kids have the opportunity to learn financial management by taking the responsibility for handling their own money.
Step 1
Find out what special accounts your bank and other local banks offer. Banks know that recruiting customers young often leads to a long relationship and most make a policy of doing so. Look for incentives such as premium interest rates on juvenile savings accounts. Some banks offer special features such as accounts that can be "split." This means your child can designate some funds for long-term savings and other money for short-term goals.
Step 2
Open the bank account in your kid's name. Your child will be more interested in learning about the account and how to manage it if her name is on the account statement when it arrives in the e-mail each month. Depending on the laws in your state, you may need to act as joint owner of the account. Minors cannot enter into contracts as a general rule, but some states make special provisions for juvenile bank accounts. Your banker can answer any questions you have on this topic.
Step 3
Provide the bank with the required information. You need your child's Social Security number as well as your own. If you are opening the account at a bank where you don't already have an account, you must have proof of identity such as your driver's license, military ID or state-issued ID card. In addition, you'll need proof of residency such as a signed lease or current utility bill.
Step 4
Educate kids about savings and budgeting. NASDAQ recommends that you help your kid draw up a plan for saving and spending money. Along with this, your child needs to take the responsibility for setting financial goals that require at least some planning for the future.
Tips and Warnings
- It's usually best to start with a savings account for younger children. When a child reaches the teenage years, adding a checking account may be appropriate and even necessary if he has a part-time job. If the bank doesn't offer a savings account that can be structured with funds split into long- and short-term savings, consider doing this on your own by encouraging your kid to put long-term savings into certificates of deposit.
Things You'll Need
- Photo identification
- Proof of residency
Member Comments