Piggy banks make a great gift for a young child, but eventually it's time to introduce children to the thrilling adult world of savings accounts. Children and saving don't always go hand in hand, so a savings account at an early age is a good first step in establishing a firm foundation for financial literacy in the future.
Bank Programs Tailored to Little Savers
Luckily, many banks now offer programs specifically geared towards children and saving, some offer savings accounts for kids as young as 5 or 6 years old. Whichever bank you choose, ensure the bank has a low minimum balance requirement and no monthly fees. Typically, many banks set a minimum account balance for as low as five or ten dollars.
A growing number of banks and credit unions have special programs for young savers, offering fun monthly newsletters and programs at the bank designed around kids and money. Opening up a simple savings account at a young age helps kids get excited about saving and teaches them financial literacy skills in the process.
Opening a Savings Account for the First Time
When opening the bank account, take your child with you so that the teller can explain the process and answer any questions about money kids may have. Typically, both you and your son or daughter will have to sign forms to authorize opening the account. Opening the account together will reinforce the concept of children and saving money. Ask the bank to include your child's name on the bank statement, or to address statements just to the child if possible.
Savings Account Options Geared Towards Kids
ING Direct offers an Orange4Kids program geared towards children opening their first bank account. Since the bank is online, your kids can't technically go into the branch with you, but they could sit alongside and help as you open the account online. This account offers no fees, no minimums, and a modest but respectable interest rate.
US Bank offers the Star Savers savings account club for minors. There's a minimum account balance of $25, but no monthly fees and ATM withdrawals are free. The accounts convert to a standard savings account when the child reaches 18 years of age.
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