Financial literacy is a vital subject that is sadly not taught in school, which leaves the responsibly of teaching your child how to manage money firmly on your shoulders.
It’s not getting any easier. Money is changing from piles of fascinating coins and colourful notes that they can count, store in a piggy bank, and spend in the sweet shop, into a strange concept that somehow exists in your phone, in a piece of plastic, or something called a bank, which used to be on your high street.
However, all is not lost. A children’s savings account could still help them learn some vital lessons about money – including some new skills that previous generations never had to acquire.
Money will still exist, even when cash does not – which makes a children’s savings account the perfect introduction to the way we will all manage our money in the future – digitally.
And the benefits don’t end there, for children, parents or relatives.
What is special about a children’s Savings Account?
Most banks and building societies offer children’s savings accounts. Almost all ensure that their accounts are easy and fun to use, with a wide range of extra features designed to appeal to small customers, and often relatively generous rates of interest.
They do this because they know that small customers soon grow to full size and may be happy to stay with the bank for life.
Children’s savings accounts can be opened for children of any age by parents or guardians, who may manage or at least oversee them on behalf of the child until they reach the age 16 or 18, when they are automatically converted into a normal adult savings account.
In the past, savings accounts were accessed in branch, and savers issued with a passbook which recorded details of balances and interest earned. These days, children can check on their savings online.
Why your child needs a savings account.
Introducing your child to saving and managing money early on sets the foundation for a lifetime of responsible financial behaviour. A digital account has a natural appeal for the modern child, who can watch their money on screen. It’s an opportunity to see their money grow over time and understand the benefits of patience and long-term planning, setting goals and the power of compound interest.
Some children’s accounts even come with a card that can be used to make deposits and small withdrawals and purchases, the ideal introduction to the everyday money management skills they will need in the future.
Plus of course, a savings account also provides a practical avenue for managing money. By the time the child has become a young adult, and the money is theirs to command, it may have grown into a worthwhile nest egg. It could be a big help with the costs of education, a gap year or even go towards a deposit on a first home.
Why you need your child to have a savings account.
Naturally, you will want your child to become financially responsible, learn money management and start building up wealth. But there are some more direct benefits for you.
Christmas and birthdays keep coming round. Being able to give money to go into a savings account is the perfect solution for yourself and any relatives who find it impossible to find a gift they are sure the child will actually want.
How to open a children’s savings account
Start by researching children’s savings account options offered by various banks and financial institutions. Look at interest rates, fees, and features. Consider banks that work harder to make children’s savings accounts appealing with educational tools and resources.
Typically, you’ll need identification documents for yourself and your child, such as passports or birth certificates. Some banks may also require proof of address. Once you’ve chosen a bank, visit the branch or go online.
Take the time to explain the basics of the savings account to your child. Teach them about interest, how deposits and withdrawals work, and the importance of regular savings. Share their excitement when a deposit is made, or interest boosts their balance. This provides an opportunity to discuss their savings goals, celebrate milestones, and answer any questions they may have.
Finding the account that will help your child become financially literate, confident, and prepared for adult life with a cash lump sum may take a little research – especially as you also want one that offers a good rate of interest, to help those savings grow faster.
Simply call us at Continuum for help finding the account you need.
The Financial Conduct Authority does not regulate deposit accounts
The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable savings strategy, you should seek independent financial advice before embarking on any course of action.