The benefits of a child savings account

Posted by James on Friday October 17, 2014 at 15:20:12:

One great way to giving your kids a head start in financial management is opening an account for them. This account is known as a child savings account. This is an account that offers an opportunity for children to learn about financial management - how to save and also manage money. As a result of this practice, children get to know how saving money in the banks works. These accounts are similar to that of adults with only little variations. There are certain basic elements of financial management that your child gets to know when you open a child savings account for them. The aim of this article is to show you the benefits of opening a child savings account for your kids.

Now your child knows what banks basically do and where to go if he or she ever needs such services. They become aware also at this early stage of the importance of having an account in the bank. They know it's a place where their money is kept save to be withdrawn whenever they want to. They are also being educated on the subject of interest, that is, knowing what interest is all about. They get to know that as their money is put into the bank, it is being used by the bank for several purposes like giving it out as loans or mortgage money to people. As this happens, an interest is given. With all of this knowledge in place, they are equipped to make better financial decisions in the course of their life.

According to a recent research, it was revealed that kids who operated savings account were more financially aware than kids who did not. This is to say when it comes to managing money, they were better at it. They knew better how to make investment decisions and accrue assets. It drastically changes the way a child thinks about the future. How they plan and prepare financially. It helps them understand the value of saving money. Creating this savings mentality goes a long way in helping reduce the challenge of debt.

With a child savings account, you are teaching your child to think in terms of safety, avoiding what I will call financial injuries in life. By this practice your child is trained on the importance of putting money in the bank and when he or she grows old will definitely not depart from that way. Also, with a savings account you get to teach your child at that early stage how to reconcile their account statements as they receive a monthly or quarterly statement from their banks. This is fairly easy to do.

Unlike other accounts this one most of the time has no minimum balance required. You can start saving with whatever it is that you have and build it up for the future of your child. Apart from helping the child with financial management sills, it can assist you as the parent in later time in paying your child’s bills and ensuring their future.