Many new parents are not aware that they can open a baby savings account as soon as the child is born. As long as the child has two pieces of ID such as a Social Insurance Number (Social Security Number in the States) and a Birth Certificate.
1. Keep organized
The account can serve well when putting money away that is specifically set aside for the child. It’s a great way to separate gifted money from grandparents or siblings, social security payments/ benefits, birthday presents, and college tuition / RESP savings.
2. Teach Economics 101 Early
After the little ones have mastered the piggy bank you can simply introduce the bank account and teach them the ABCs of banking. With the current state of ever rising real estate values and soaring tuition fees, getting a taste of money knowledge is not such a bad idea. Even teaching the kid to put away $5 of the $20 monthly allowance teaches a great lesson – don’t spend everything you have.
3. Prepare them for the Future
Teaching your kids about money early on also teaches them to think ahead, and preserve what they have.
“Education is teaching our children to desire the right things.” – Plato
Exposure to money management from early on won’t guarantee they’ll be the next CFOs of Google but will sure teach them to set aside for a rainy day and save for something they’ve always wanted!
4. Take advantage of Free Banking
Why keep the children’s money at home or mix it with your own banking when you can deposit it into a free account and have it safely tucked away. On top of that it can accumulate interest if you invest it into a risk-free investment such as a Guaranteed Investment Certificate (GICs), bonds, or the money market mutual fund.
5. Out of Sight Out of Mind
As a parent, you are less likely to spend the children’s gifted money if it is separate from all your banking. If the money is deposited into a separate account and requires a little extra effort to withdraw, such as visiting the branch, then you are less likely to do it. It’s easy to withdraw $20 here and there for living expenses if the money is within arm’s reach, but you’ll be glad you didn’t when it’s time to cash out for that new bike they wanted, or the new Xbox that everyone at school has etc etc etc.
>>FAQ What is a Savings Account?
A savings account is a bank account, which usually has limited transactions, no monthly fees, an interest rate and allows unlimited deposits for saving purposes.
The Best Kids Savings Account:
- Free until the age of 18
- Unlimited transactions and no minimum balance
- Online access
- The parent and the child can both have access
- The child can choose to have sole access after the age of 12 (varies by state or province)