What You Need to Know About Youth Savings Accounts
Having a savings account is an important part of our financial picture, especially as we plan for major expenses or prepare for the unexpected. But is it necessary for kids to have a savings account? Below, we'll break down why having a savings account for your child is important and what you'll need to help them start saving.
When should I open a savings account for my child?
Whether your child has just hit their first birthday or is almost a teenager, you may be wondering if you should open a savings account for them. The short answer is: when it comes to a savings account, it's never too early to open one for your child.
Younger children will grow up learning about the importance of savings. If your child is older, they'll be able to actively deposit money into their account and watch their savings grow.
Why should I open a savings account for my child?
Having a savings account for your child will help teach them about managing money and saving for the future. Through the years, your child will be able to make deposits of birthday money or allowance and watch their savings grow. When they're older, they'll be able to use those savings to buy items that they really want, like that new video game. Being able to set a savings goal and reaching it is a great learning experience for a child.
Another benefit of opening a kid’s savings account is financial education. Many youth savings accounts also contain a financial education program along with it. These programs introduce information about finances and saving in a fun way and often have activities and resources to help kids learn more about money.
What is required to open a savings account for my child?
At 1st MidAmerica, to open a savings account for your child, you'll need:
Child's Social Security card
$5 to open a savings account
What else do I need to know about my child's savings account?
Once your child's account is opened, there are a few things you'll need to keep in mind. For instance, you will be a joint account holder on the account with them until they turn 18. You will have the ability to control the money in your child's account, but they will also be able to put money in and take money out.
A savings account is just for saving - there will be no debit card with this account. The only way you'll be able to access the money is to make a withdrawal. Once your child is a teenager, you may want to consider a checking account where they will have access to a debit card.
Most youth savings accounts will not have a monthly fee or a minimum daily balance. You'll want to make sure that your child's account doesn't charge a fee since they may not be making regular deposits.
No matter when you choose to make the move, opening a savings account for your child is a great way to help them save for the future and learn how to manage money.