Having their own savings account makes children more money aware and can encourage them to develop good savings habits as grown-ups.
Big initiatives are being set up to promote savings accounts for kids, In San Francisco, for example, every kindergartener receives his or her own college savings account with an initial deposit of $50; Cuyahoga County in Cleveland, Ohio, offers a similar program in which every kindergartener is gifted $100. The Harold Alfond College Challenge in Maine awards children an initial grant of $500. This year, the state of Nevada launched a program in which it opens a college savings account with $50 for kindergarteners in 13 rural counties. All in all, there are about 16 American cities and states that have started some form of account for their children.
Besides saving, here are 5 benefits of opening a savings account for your children:
1. Your children should receive a statement monthly or quarterly. This is an excellent opportunity for you to teach your children how to reconcile a statement to their account. It is fairly easy to reconcile a savings account.
2. It will help your children to become familiar with how a bank account works. Many banks still offer passbook savings accounts. This means that your children will learn how to record deposits and withdrawals, before opening a checking account.
3. Will help you educate your child about the potential bank account related scams. This is especially important for children who are active on social media sites. Your child should not disclose Net banking password and debit card PIN to anyone, even if the person claims to be from the bank.
4. The excitement of going to the bank and making deposits and withdrawals on their own encourages kids to find ways to earn more money which is one more step to financial independence.
5. Research in 2011 by the Center for Social Development at Washington University in St. Louis suggests that college savings accounts containing as little as $1 result in students being up to seven times more likely to attend college.
In the UK Children born between 1 September 2002 and 2 January 2011 qualified for the government’s Child Trust Fund scheme.
Children’s savings accounts are much the same as adult ones, and they are offered by banks and building societies. There are a few variations, but mostly they are simple, safe cash accounts that usually pay some interest.