Kids are likely to invest in shares, become financially aware, build up assets and also go to college just by one single action. That action is by opening an account for them. It doesn’t matter even if it is a simple savings account, according to a recent research.
According to William Elliott III, associate professor, University of Kansas, “even a small savings account can change the way that children think about their future and going to college. You’re creating this savings mentality, so children are becoming more financially aware. For children in low- to middle-income families, having even a little money in the bank designated for education may help them—and their parents—realize that college is an attainable goal.”
“Some experimental data has proved that savings change the way children think about their future. Having an account, having a structure in place, can have a positive affect not only on the children’s expectations but on the parents’ expectations,” says Ass. Prof. Elliott.
Helping your child beat the debt trap
It is our duty as parents to ensure our kids are sufficiently enlightened as well as empowered so as to be able to thrive when saddled with the responsibilities of adulthood. Considering the statistics of individuals knee-deep in credit card debt, unpaid loans and other issues surrounding their finance, you’d understand that it’s best to start them young. Teaching them how to deal with money is a major skill to impart to them early enough.
If you’re a bit confused on how best to go about opening a bank account for your kid, here are 4 tips to regard:
1. When opening an account, choose a savings account
Except they’re probably 21 in which case they ought to be aware of this, don’t open a checking account for a kid. An account that brings in a little interest, no matter how little, may be best for those early years. As time wears on, you may continue to teach them all about cheques and other forms of bank account that may exist.
2. Ensure the account is free
Make proper enquiries concerning your child’s account. It may not be wise to presume that no fee is attached to theaccount just because it is for kids. It may be best to start with a free account.
3. Teach them how they can access their account online if there’s an option for that. Financial literacy cannot be complete without a good knowledge of how to manage and monitor funds via the internet. You may also want to instill the sense of security and caution in them so they will come to understand that issues that pertain to their bank accounts such as ATM pin, secret codes or questions, must be kept private at all times.
4. Opt for a bank that provides financial guidance for young account holders
Certain bank programmes which are accessible on their websites may feature financial enlightenment for kids through quizzes, riddles, games involving virtual money, tutorials on how to save money and lots more. According to Acworth, an experienced banker: “I think it’s important for a savings account to promote financial literacy and have some component of that versus just this idea of save, save, save.” He went further to explain lucidly that accounts for kidsshould be “a special savings account for children that doesn’t just provide a place to keep money; it offers access to its online site, which teaches children about everything from using credit cards to paying taxes.”
This is totally agreeable and we do hope that parents will eventually realize what great good they’ll be doing if they choose the right bank and lead their kids through the process of financial literacy.