Piggy Banks to Paychecks by Angie Mohr

Author:Angie Mohr [Mohr, Angie]
Language: eng
Format: epub
Tags: Children - Finance, Personal
Publisher: Fitzhenry & Whiteside
Published: 2013-10-21T00:00:00+00:00

None of our children has their own bank account. If they get birthday money, Mom and Dad hold onto it so it doesn’t get spent on junk. We encourage them to set goals, and when they’ve saved enough, we go buy it together.

~ Heather M., Cooperstown, North Dakota

» Bank Account Options for Kids

While it may be easy to simply open bank accounts for your kids at your own bank, it pays to shop around, especially when it comes to kids’ accounts. There are many options out there and each bank handles its “junior savers” differently. Some banks simply don’t allow minor children to hold bank accounts. Some require that a parent’s name must be on the account with the child. On the other end of the spectrum, there are banks that will give kids a checking account of their own, complete with checks and a debit card.

When comparing kids’ bank account options, one of your biggest concerns should be fees. Banks in both Canada and the U.S. are somewhat regulated in the amount of fees they can charge, but they can still add up to be substantial. There may be account opening fees, monthly maintenance fees, debit card fees, check fees, electronic access fees, and many more. Some banks waive these fees on children’s accounts. Be sure to read the fine print on the account before opening. Fees can take a big bite out of money that kids are trying to save.

Kids often start with a savings account to dip their toes into the banking world pool. Savings accounts are straightforward and easy to understand. As your children get older and get more money-wise, allowing them to open a checking account can help them become comfortable with electronic transactions. A debit card makes it easy for kids to pay for purchases from their account without the ability or the temptation to go into debt.

One word of caution about savings accounts with long-term savings, such as college funds or car accounts. These accounts can accumulate significant amounts of money over time. I always recommend that parents be co-signers on the account and that withdrawals require the signature of both the parent and the child. Many kids go through stages in their childhood when they make rash decisions and may rationalize to themselves that buying a motorcycle now is better than saving up for college. While I don’t believe you should micro-manage your children’s money management, it is still your job to keep them safe from serious mistakes that could hurt them financially for years. Bottom line—shop around for the accounts that offer your kids the most features with the least amount of fees.

» What to Look for in a Kids Savings Account

When you are helping your child open his own savings account, there are several factors to consider. Each bank’s account offerings will be different. The more interactive your child can be with his account and the less the amount he has to pay in fees every month, the more likely he will be to continue to be enthusiastic about saving money.

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