Does My Baby Need A Savings Account?
Since your child isn’t running a business or writing checks, a savings account is the best bet for your buck!
How do you choose an account with the best earnings potential?
Required Initial Deposit?
What Do I Need To Open A Savings Account For My Child?
Choose a bank that allows ATM / In-person Deposits :
Link your account with your child's account:
Personally, this is the option that works for me since I live in a cashless society. Care must be taken so as this doesn’t become a two-way street. Be as diligent with depositing monthly into your child’s account as you are with paying your bills. An easy way to do this is to set up automatic deposits on the last working day of the month for example, and including this in your budget.
What Is The Best Savings Plan For My Child?
Each family and their resources is different. Only you can determine what savings plan is the best for your child. Just be sure to be realistic about how much you can deposit each month.
Here’s a good mantra:
“From today onwards, I will set aside x% of my child’s cash gifts and x% of my monthly budget towards Child Y‘s savings account.”
Making this one commitment will change your children’s financial futures.
Personal Notes on Savings
Financial security is not a topic that black people, especially, talk easily about. We are taught that money, or the lack thereof it, is a private matter.
But we should be open and honest with our kids. They need to understand that money is not an abstract concept and that saving is a good thing. It is never too early or too late to set up our lives.
Financial literacy is a vital tool and as early as 2 years old, I started introducing my son to the idea of savings and spending wisely. I did help that Denmark teaches practicality in all aspects of life so he hasn’t been raised with the idea that Santa comes down the chimney with toys.
He does however believe in the existence of Santa and Ghosts and Superheroes, etc.
What is great though? They learn, albeit after many years, that the sacrifice and discipline was worth it when they turn 18 or 21 and you hand over full control of the account to them. It will easily be enough for a down payment on a house, textbook money for college, student debt, etc.
Awesome, right? Just remember that when it comes time to hand over these accounts to your kids (who are young adults by then), they aren’t going to remember the Paw Patrol toys you didn’t let them pick out or that expensive remote controlled car that they were clearly too young for!
They will be very grateful for having parents who had the foresight to set them up for a less stressful start in their financial independence journey.
Saving, is basically the best way to teach them about planning ahead and to steer them away from a paycheck-to-paycheck mentality. That being said, your savings plan for your child should START TODAY!!