Recently, financial institutions have started offering products and services geared specifically towards children. With new opportunities for children to learn the value of money, and most importantly, how to be responsible with it early on, parents have a new lesson to add to the parenting curriculum: Defining Your Kids’ Financial Needs 101.
This is a great opportunity for you to sit down with your kids and clarify any questions they may have about money and saving. Whether they get a weekly allowance for doing chores or have birthday money set aside, there are many ways that your child can make a little money go a long way.
The next step is choosing the right service that will be cut-out best for your child’s needs.
Now for a little investigation into the different types of financial services for kids.
Every financial institution recommends you start a financial profile for your child as soon as they’re born. For kids under 12, a savings account is a great place to get started. Savings accounts are a safe way to allow your child’s money to grow steadily over time. Encourage your kids to put some of the money they receive on their birthdays, or during the holidays, in their savings account. Sooner than they know it, they are really going to appreciate that cushion.
For kids under 18, there are a range of options to choose from including:
1. A checking account. A checking account is used for regular financial transactions like purchasing, deposits, withdrawals, and paying bills (such as a cell phone bill).
2. A savings account. One of the advantages of having a savings accounts for people under 18 is that they get a much better rate than adults. The adolescent can accumulate interest right into their account.
3. A build-up savings account. This is a blend of the 2 accounts mentioned above, which enables your child to manage their money and grow it simultaneously. They will be able to do all the regular transactions a checking account offers while seeing their monthly interest accumulate.
18 and up
By the time your child reaches 18, they will be entering the higher learning phase of their life. Their financial needs will shift towards tuition, books and dwelling.
Banks are well aware of this and start offering credit cards and credit lines to students.
According to a recent survey carried out by the Institute of Financial Education, it is strongly recommended that parents are actively involved with their children’s financial decisions, especially when it comes to credit. Too many young adults find themselves in deep debt because they don’t know how to manage their money, or simply spend money they don’t have.
Make sure your kid understands the full scope of the responsibility that comes with a credit card. Credit cards should only be given to kids that have an income so that they can pay it off regularly.
For more information, you can visit your local financial institution or browse different reputable financial sites online to see which services suit your child’s financial needs best.