When is the Right Time to Open a Savings Account for Your Child?
How much does your child know about finances? According to a recent survey, only five percent of adults received any kind of financial education in school. This is cause for concern when you look at the record high student loan and credit card debt. If you want to better prepare your child with the right tools to become a financially successful adult, a savings account is a good place to start. Letting your child watch money going in and coming out of an account is a great lesson in money management. However, as a parent, you may be wondering if your child is old enough to handle this type of financial responsibility. Read on to learn more about when it’s the right time to open a savings account for your child.
A savings account is a deposit account created to hold the money you don’t currently need or plan on spending right away. It allows you to keep your money in a secure location, while earning a little interest at the same time. Most kids are able to understand the concept of a savings account early on. Here are some signs to look for to know when your child is ready to use a savings account.
Curiosity about money
If your child shows an interest in money, coins or even shopping, this is a good opportunity for a savings lesson. Explain how a credit union is a safe place to keep your money until you need to spend it.
Overflowing piggy bank
If your child’s piggy bank is overflowing with coins, it’s a good time to talk about opening a savings account before that money is spent elsewhere. Take this opportunity to show your child that if he puts his money in a savings account, it can earn interest.
If your child wants to save up for a big purchase, like a new video game system, it’s the perfect time to start a savings account. Your child can make deposit into the savings account so he’s not tempted to spend it on impulse buys. This is also a great opportunity to teach your child the difference between a want and a need. Do you really need that new video game system or is it just something you want? Helping your child identify the difference between a want and a need will set the foundation in learning how to budget, save and buy the correct way. Open a new Lil’ Partners account, designed for kids 12 and younger, by July 31, 2022 for a chance to win annual passes to the Denver Zoo and the Children’s Museum! Plus, we’ll even make the first $25 deposit.
If you’re ready to teach your child the importance of saving and spending, a savings account is a good place to start. Just watch for the signs to see when your child is ready.