As parents, we try our best to prepare our kids for their future and a big part of that is teaching them responsible ways to manage their money and banking.
Although knowing when and where to start can be a tricky one. A great place to start is opening a kids specific savings account, and within this article, we share with you some tips on the best way to approach your child’s very first savings account.
Build excitement when opening a Bank Account.
It’s a great idea to open a savings account when your baby is born and make regular deposits for their future needs. However, this won’t be the account your child will use to learn how to manage and watch their money grow. Start with a simply piggy bank, and once that piggy bank is full, it’s time to explain how banks and interest works. Make a big deal about it when you bring your child to the bank or open their savings account together online. It’s a huge milestone they won’t forget.
As the parent, when you open a Defence Bank Kids Club account, you will be in charge of the account until they turn 12, but that doesn’t stop you from encouraging them to make regular deposits and reviewing their bank balance online, watching their money grow with each deposit and interest accumulated.
Fun fact: When you open a Defence Bank Kids Club account, your child will get a camo piggy bank.
Choose a bank account with no strings attached.
When choosing a bank account for your child, look for one like the Defence Bank Kids Club Account that doesn’t have a minimum balance requirement or charge monthly fees. It is likely that only very small sums of money will be deposited so maintaining a positive experience, and not one where excessive fees are chewing up the savings, is important for your child to understand how their money can grow with consistent savings.
Start saving for short-term goals.
Teaching your child how to focus and save for something is a lifelong skill that is best started as soon as they begin pestering you for a new toy or gadget. To begin with, make a short-term goal so it is achievable, and your child can see the benefit of saving quickly. Once they’ve mastered a short-term goal, they can then move onto saving for something more expensive.
Don’t forget that children are clever, and even at a young age they will quickly learn all about opportunity cost. Sure, you can have an icy pole, but that means less money for your savings, and a longer time to wait before you get what you were saving up for.
Make a habit of reviewing bank statements.
To keep your child interested in their savings account, make a point of reviewing the bank statements together. As a tip, compare one month’s statement against the previous month to demonstrate the value and growth of consistent deposits.
Let your child do the talking.
Even though you’re the authority on the account, let your child interact with one of the banks friendly staff so they feel in charge of their money, and start to learn bank-talk.
Make savings fun!
It’s up to the parent to ensure that their child doesn’t part with savings money too easily. Short term goals and maintaining a little spending money is key to the positive experience. Don’t expect a huge amount of financial discipline right from the start as it is a skill that needs to be developed like any other.
Hold yourself back!
As a parent resist the temptation to top up their account on demand. All the good work you have done to teach them about the discipline of saving will be undone. If you want to put money aside specifically for their future, open another account that they can’t see.
Banking for a better future.
Teaching children about responsible money management from a young age is an important life lesson and helps set them up for future success. Starting off is as simple as a kids savings account and a piggy bank, both of which you can get at Defence Bank.
Important note: This information is of a general nature and is not intended to be relied on by you as advice in any particular matter. You should contact us at Defence Bank to discuss how this information may apply to your circumstances.