How to choose a bank account for your child
By Jo & Carl Violetta
A
s parents, we want to do everything we can to guide our children towards becoming happy and fulfilled adults. Financial literacy and sound money management skills are two of the greatest gifts we can give our kids. Focusing on financial literacy at home can help kids learn how to save money, make smart financial decisions, and grow into financially savvy adults. Pocket money is an effective tool to teach kids about managing money. For example, encouraging kids to save their pocket money for special purchases teaches them how to wait for what they want.
Opening a bank account for your child to save their money also offers a valuable opportunity to teach them about compounding interest. But how do you choose the right bank account for your child? There's plenty of choice when it comes to kids' bank accounts, so it can feel a bit overwhelming. Here's what to consider when looking for a bank account for your child.
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Peninsula Kids – Summer 2020/21
Bank account or money box?
I like to think about the child's age before I decide whether or not to open up a bank account for them. My husband Carl and I have two kids, Eva (19) and Marcus (6). Marcus doesn't have a bank account yet; he uses a money box. For younger kids, I prefer them to have a money box rather than a bank account. Physical money offers a tactile experience. When children can physically touch and see their money, it's less of an abstract concept for them. They can practice maths skills by grouping and counting different denominations. They can physically watch their money grow in their money box.
Fees
If you do decide to open a bank account for your child, try to find an account with low or no fees. Most kids' bank accounts have no fees. Be aware, though, sometimes kids' bank accounts will say that they have no fees, but they actually have some sneaky hidden fees. For example, the bank may advertise the account as having no fees, but this is on the condition that your child only makes one withdrawal per month. You need to read the terms and conditions carefully. continued next page...