How can setting up savings bank accounts help you teach your kids financial management?

Teaching your child the concept of financial responsibility is a very important thing to do at a very young age. The faster you do it, the better for the future of your child. When the child becomes a teenager, it will be really hard to convey the concept given the number of distractions that they will face. You can start by teaching the following basic rules of investment. 

The importance of compound interest is something that can never be underestimated. Your money can multiply if you put it in an account with compound interest calculation. It is very simple. You will earn interest on the interest that you have already earned. This way your principle amount will never be the same.   

You also need to teach them to set and achieve goals that they hope to reach. Goal setting is not just important financially, but also in other aspects of life. Open a savings bank account and ask your child to set a realizable goal as to how much money he or she wants to have saved by the end of the year. This will make them learn the concept of savings and budgeting. 

Now saving is a very important concept in life. No matter how much you earn, you will always be chasing a white rabbit if you do not save a little every day. Teaching your child to save even a penny a day can go a long way in instilling confidence in them. 

When you start looking for savings accounts where your kids can invest their money, there are plenty of options. The obvious choice would be to invest in an account with your personal bank so that you can easily link the two accounts and monitor activity on your Childs account. But do remember that there are lots of specialized accounts out there that provide reduced interest rates to kids with low annual fees. Also look for a zero balance account because your child cannot expect to maintain a high minimum balance with no stable income. And lastly, do remember that bank accounts for kids are all about making them understand that it can be fun if managed properly. Do not make it look like a headache to save money and budget, make budgeting a fun family activity where everybody can provide inputs and learn how to plan a family. This is one of the most important lessons that you can give to your child.