baby savings account

Savings Account For Baby?

Being the neurotic, always-have-to-plan-ahead mom that I can be,  I started thinking about saving accounts for my children even before setting up their nurseries.
Living in a foreign land, I had to do all my research while I still could (after almost 6 years, Denmark still is a foreign land to me, yes!). Brace yourself for a pretty lengthy post on securing your child’s financial future.
First off, nothing prepares you for the amount of paperwork and documents you are going to pull up if you do not live in an electronic society like Denmark is. But at the end of the day, just imagine the possibilities of how much that savings account could earn for your child over their first 18-21 years! Even if you are starting late, there is no better time like now and you can always catch up on payments to get you up to what your goal is.

Since your child isn’t running a business or writing checks, a savings account is the best bet for your buck!

The money saved can earn interest over time and the money is more difficult to access since there usually isn’t an ATM card or checkbook tied to the account. There are checking accounts that earn interest, but they also require account upkeep fees which savings account generally do not.
savings investment

How do you choose an account with the best earnings potential?


Here’s where you have to do a little research if you live in a place with options. Your best bet is to plan backwards; think about what your goal is and work backwards to deduce how much to save monthly and what type of account gets you that!
My advice will be to get an account with no fees (Duh! You are trying to save money, not give money away), and one that compounds daily/monthly. The more frequently the savings account compounds interest, the more money you make.

Required Initial Deposit?

Before you take the leap, it is important to be certain you can at least meet the required initial deposit.
If your finances are anything like mine, you will be grateful for a separate account to put your child’s money in. I swear my checking account has a goblin that comes out whether there’s cash available for it or not!
It helps when you add cash gifts the kids receive to the account. Then you don’t have to save all by yourself. They are (indirectly) saving too!
If you do not have money readily available to start up the account, then be sure to look for savings accounts with no minimum opening requirements. This way, you can still open the account and wait until you have an influx of cash.

What Do I Need To Open A Savings Account For My Child?

Children under 18 generally cannot open an account on their own. The exception to the rule is if you are under 18 and have a job.  As a rule of thumb, there are two types of accounts that can be opened for a minor: a child’s savings account or a grandchild’s savings account. Most banks offer a fixed amount of money that can be saved annually and/or in total tax-free. Any amount over this set amount is liable to be taxed. More information can be found in Danish here. 
As like Denmark, children under 18 cannot open accounts on their own so an option is a custodial account. A custodial account generally means that that you will be part owner to this account. You would need both the custodian and the child’s documentation (social security number, birth certificate, etc.). Want more information, look here
Ghana: In my experience, opening a savings account for your child is a more cumbersome experience in Ghana. The easiest method is to open an educational savings account which is linked to your main account much like a custodial account. Each bank has different rules and different offers and packages unlike Denmark, so i would say, talk to your bank for more information to be able to choose what works for you. 
child and mom
savings coins

Deposit Options?

Now that you have your child’s savings account all set up, you have to think of what deposit method is convenient for you.

Choose a bank that allows ATM / In-person Deposits :

If your bank allows In-person and/or ATM deposits, take advantage of this and use this. It is especially convenient when you are depositing cash gifts from family and friends to your children.

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.

Clearly there are some considerations to take when setting up an account for your little one. Once it is in place though, you will have a great catch-all for all the cash gifts your children receive over the years and any you may want to squirrel away for them. And as savings work, the longer that money has to earn interest, the more money there will be for your little ones. What are you waiting for? Start today!

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. 

savings piggy


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!! 

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