Why Your Child Should Have a Savings Account
Kids are growing up with more access to financial products than ever before. From debit cards to mobile apps and specialty accounts, they have many options for managing their money. In honor of Youth Month, let's look at why it's a good idea to open a savings account for your child.
Teach the basics of saving
One of the most important lessons you can teach your child is the value of saving money. A savings account is a great tool to help your child understand this concept. By depositing money into the account regularly and watching it grow, your child will learn the importance of setting money aside for the future.
Teach kids about money management
A primary benefit of opening a savings account for your child is that it helps them learn about money management in a truly hands-on way. When your child has their account and can control their spending to a degree, they can learn the basics of saving. They'll also learn the importance of tracking their spending, setting money goals, and managing an account at a financial institution. This includes depositing money and tracking balances, which will evolve into using a debit card when they get their first checking account.
Help kids save for a short-term financial goal
Turn the lesson of smart savings into a lifelong habit by having your child use their account to practice saving up for a short-term goal. First, talk to your child about their financial wish list and help them choose a realistic goal. Next, help them create a savings plan while using their account, which will help them reach their goal. Your kid can now set aside money they've earned from an allowance or part-time job, or that's been gifted to them for a birthday or other occasion until they have enough money saved in their account to fund their purchase.
Prepare for the future
Starting a savings account and learning experience from a young age can prepare your child for unexpected expenses in the future. As they age, their needs and expenses will increase, and the more you help them prepare now, the better off they'll be. For example, your child may need extra cash for a broken phone or a car repair when they're older. Having money set aside for emergencies will prepare them for any financial reality.
Teach the concept of interest
A savings account can be a great way to introduce your child to earning interest. Through the magic of compound interest, the interest money earned on their account will be added to the principal, creating a snowball effect that can lead to higher growth over time. Teaching your child about these concepts can help them develop a lifelong interest in investing and financial planning.
Build responsibility and independence
Above all else, having a savings account can help your child build a sense of financial responsibility and independence. By managing their own money and deciding how to save and spend, they'll learn valuable life skills that will serve them well in adulthood.
In short, opening a savings account for your child is an excellent way to teach them important money habits and prepare them for a financially successful future. At Elevate Credit Union, we are proud to offer our Dollar Dog Kids Club and iSave teen accounts. Stop by our website or a branch, or give us a call to open one today and jumpstart your child's financial future.
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