5 Tips for Parents Opening a Bank Account for Kids

Key points:

• Teach children about money early in their lives to put them on a path to financial success.
• Make the account-opening experience fun and memorable for your child.
• Strive to reward your children when they make smart financial decisions.

As parents, we want to model good behavior for our children. This is especially true when it comes to money management. Teaching our children about money early in their lives can put them on a path to financial success. If you’re considering opening a kids savings account, either now or in the coming years, here are some tips to consider.

1. Teach children the importance of saving money

Opening a child savings account is a great first step toward teaching your kids important financial lessons because the earlier they understand the importance of saving money, the better. It’s important to let kids know that people save for different reasons, such as creating an emergency fund, building wealth, or paying for a big-ticket item like a house downpayment or a new vehicle. The point is, you save for something you’ll want or need later on. This lesson could be particularly valuable with older kids, who may want to start saving to buy their own car or pay for college costs in the coming years.

2. Make the account-opening experience memorable

Your child’s piggy bank has grown over the years, and now it’s time to move on to grown-up things like bank accounts and interest. Your kids won’t forget the day they went with mom and dad to open their first savings account, so try to make it fun and exciting. Ask if your child can tour the bank or credit union, maybe get a peek into the vault, or engage in other activities to make the day memorable.

3. Visit your credit union or bank

To build on your child’s account-opening experience, take them with you when you visit your credit union or bank. You can explain why you’re visiting, especially when depositing funds to your accounts for specific reasons, like building your emergency fund or saving for something important.

4. Reward good financial decisions

Here are a couple of ways you can show your child the value of saving. First, set savings goals for your child, and when they reach those goals, reward them by matching those amounts. Second, show them your savings statements so they can see the magic of earning interest by doing nothing more than keeping money in an account where it can grow effortlessly.

5. Take it up a notch as your kids get older

Introduce complex financial topics gradually as your kids get older. For example, bank statements might not make sense for younger kids, but as they get older, maybe around 10-12, you can review statements together and answer any questions they have. When your kids get their own email or social media accounts, be sure to teach them about phishing and other kinds of financial fraud. These are just two examples of how you can start your kids’ financial education when they’re young, helping to position them to make sound money decisions.