Have you opened a bank account yet for your child? A child’s own bank account is a great way to teach kids about the value of money. You can encourage your child to invest their pocket money or birthday money etc into a bank account so that they can see their savings grow – and to teach them to save up for something they really want rather than just waste the money they have now. Teaching your children about the value of money from a young age is a great way to set them up financially for life!
But where do you start? Nearly all banks and credit unions offer different sorts of kids bank accounts these days – and some are better than other.
A good kids bank account should have the following features:
- Have no fees or charges or monthly service fees etc
- Have a decent interest rate (they are competitive – so shop around for the highest rate you can find!)
- Be accessible by the parent or guardian
- ‘Bonus’ interest if regular deposits are made without withdrawals
- Regular Statements or a Passbook so your child can see his/her savings grow!
Banks are fiercely competitive when it comes to childrens bank accounts. Why you ask? Because most parents leave their childrens money in the same bank until adulthood, and most children will be loyal to the bank they grew up with. The Banks are generally guaranteed a customer for 10 – 20 years! Most children’s bank accounts are converted to adult style accounts by the time your child hits 15 – so just check out the terms and conditions as your child approaches that age.
Saving up for University or a Car
If your child starts accumulating real money in their savings account or you are matching dollar for dollar, consider transferring the funds into a Term Deposit to accumulate more interest. The only problem with Term Deposits is that they will have to go into your name until your child comes of age (or check the terms). Plus also check with your accountant as interest accrued on children’s accounts may need to be declared as income on your Tax Return.
Which bank or credit union did you choose and why?