One of the best ways to instill good money habits in your kids is to set up them up with their very own bank account. The process of going to a bank to make deposits versus filling up the piggy bank (or whatever change receptacle) with money can help kids understand the value of saving and maintaining a healthy balance. Many banks have kid-friendly accounts with incentives for reaching savings goals. Help your kids take a big step now toward financial independence later by introducing them to the art of saving.
Here are some tips for choosing your kid’s first bank account:
Steer clear of online banking … for now
Taking care of your account online is convenient but kids may not learn the fundamentals of savings, making deposits and managing their money on a computer screen. Stick with a brick-and-mortar bank to walk your kids through the process of making a deposit and seeing the cash in hand. It’s a good financial habit to instill at a young age and can encourage kids to be more mindful about their money.
Make use of the savings booklet
Another way to ensure kids are mindful about their money is to have them write down savings goals and progress in a savings booklet. Many banks offer these as a freebie with a kid’s bank account. Some include stickers and stamps for reaching certain savings goals which can work as an incentive for kids to keep saving and reporting their progress. First National Bank helps kids track deposits with a Kids First savings book and earn rewards every time they make a deposit.
Review interest rates
Banks need to stay competitive and will typically offer different interest rates for a basic savings account. Even though your kids may be just getting started with building up that savings account, take some time to educate them about interest rates and what they mean for their money. Feel free to shop around.
Look for extra rewards programs
Incentives to save can be very motivating for those young finance gurus-to-be. Some banks extend bonuses and rewards to kids that make frequent deposits, reach certain savings goals or participate in a savings challenge. Wells Fargo gives young accountholders the option to join its Junior Agent Saver Club where they can play money games to learn some basic money management skills.
Seek out financial learning opportunities.
Educating kids about allocating savings for different purposes — saving up for a new bike or new smartphone may be at the top of their priority list — is easier when the bank offers financial learning opportunities and programs to educate kids about the process. For example, PNC Bank’s Virtual Wallet account makes it easy for kids to divide their savings account into virtual jars.
Set your kids up for a healthy financial future with the right savings account. We’ll be doing a series of posts about kids and budgeting over the next couple of weeks so stay tuned for more tips!
Have you set up a bank account for your kids? Share your experience in the comments below.