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Wednesday, October 18, 2017

When should you be opening a savings account for your child?

Image courtesy of ddpavumba at FreeDigitalPhotos.net
This post was written by reader, Ben, and reminds me- maybe I should open a bank account for my children, because they're saving up quite a bit of money and they currently keep it all in cash...

There is no right or wrong time for you to open a savings account on your child’s behalf. For some families, it will be when the child is an infant. For others, it could mean waiting until they’re in school or earning small amounts of money of their own. It is essentially when the time is right for you but sooner is usually better, as you will accumulate more money over time.

When it comes to opening bank accounts and dealing with money there is a lot to consider. For example, it could be worth thinking ahead. What happens if you split up with your partner? Money Advice Service have put together a really helpful guide on what to do with your children’s account and savings if you separate.
Also, you might want to understand what your options are and might want to consider one that offers high-interest rates and fewer fees.

We have compiled together what makes a good bank/savings account for a child:
  • High-interest rates – as your child’s savings account is going to more than likely be in place until they are an adult, it is important for you to choose one with a decent interest rate.
  • No minimum balance – as there won’t be a lot of money saved at first, you want to choose an account that has no minimum balance requirement. This means you can put however much you want in at the start.
  • No maintenance fees – these fees will eat away at your small savings balance in a very short space of time. In order to preserve the money as best you can, choose an account that has no monthly maintenance fees.
  • Online access – online access is great for a child’s account so that you can keep track of the progress you’re making.
Opening a savings account is so easy and doesn’t require much time at all. Remember you will need to take some documents with you, these include:
  • Identification with a picture
  • Deposit either in cash or cheque form
  • Personal details such as your address
  • Your child’s date of birth
Your child will not be able to open a savings account under the age of 14, therefore you will need to sign legal documents on the behalf of your child to do this.

It makes a lot of sense to open a bank account for your child with many years ahead of them, so that the interest is on their side. It is never too early to start saving for anything and the sooner you start, the quicker you will get into the habit of doing so. It will help your child’s savings grow and benefit over time and give them something helpful to use in the future.

If you are still unsure how and where to find the best saving account for your kids, you could follow this guide that Netmums has put together.

See my disclaimer.

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