The benefits of a kids savings account

It’s never too early to start teaching your child about money. Making sure your child is saving while they’re growing up is important because it not only accumulates funds for their future, it also teaches them about responsibility and goal-setting.

Opening a kids savings account is a great idea no matter the age of your child. The earlier they start saving, the better. As a parent or guardian, you’ll be on the account as an owner and can help guide them on the path toward financial capability and independence.

Did you know?  39% of U.S. children have a savings account, according to Statista research. ¹

Teaching your child about saving money can help them to be more financially responsible when they’re older. There are some fun money books and online resources for kids available that illustrate the value of saving money and other monetary concepts in fun ways but having a kids savings account gives them real-world experience. It teaches them to plan in advance and save for the things they want to buy, encourages them to make and focus on goals, and hones basic math skills.

What to look for in a kids savings account

When shopping around for a savings account that will be most suitable for your child, look for a children’s savings account with no maintenance fees and minimal/low balance requirements  (Desert Financial requires just a $25 opening deposit for a Membership Savings account). Some banks and credit unions will dispense with strict requirements for children’s accounts. While credit unions and online banks typically offer some of the best rates, you’ll also want to consider the pitfalls of an online-only bank.

Consider any other account benefits you’d like, such as an ATM card for your child, online access and mobile banking capabilities, and the number and proximity of branch locations.

How to open a kids savings account

After you’ve found the account that’s right for your child, it’s a good idea to go to the branch together to open the account so your child can learn real-world banking skills and how to interact with tellers.

You’ll need to show at least one of the following documents when opening a kids savings account: your child’s Social Security card, birth certificate or passport.

Let the child make their first deposit with the teller so they become acquainted with physical banking transactions. Having them bank both at branches and online will build their banking savvy.

Tip: Pair your child’s savings account with a  checking account  to enhance their knowledge about saving and budgeting. However, it’s important to note that most banks and credit unions do have an age requirement for minors to have a checking account. Here at Desert Financial, a minor needs to be at 13 to have a checking account, as well as a responsible adult as a joint owner.

As the joint owner of a kids savings account, you can sign up for text alerts and make deposits or transfer funds to and from the account as needed. If you want to add funds to your child’s savings account, you can transfer money from one of your accounts. You can also help them deposit any checks they receive for birthdays or allowance money, online or at branches and ATMs. Consider automating deposits on a regular basis and/or encourage your child to make regularly scheduled deposits.

When they turn 18…

What happens to your child’s savings account when they turn 18? It depends on the financial institution, but generally, children’s savings accounts will convert to standard savings accounts once the child turns 18. If you and your teen wish to remove you from the account after they come of age, contact your bank or credit union for assistance.

Many parents open savings accounts in their name with the intention of saving up for their children. However, children don’t get hands-on experience with managing their money unless the account is in their name, too. By opening a kids savings account with your child, you’ll help them learn essential money management skills they can carry into adulthood.