Savings Account for Children: Teaching Child the Concept of Money

Like every other lesson savings is easier taught and cultivated in the early stages of life. Children should be taught to manage money as soon as they start to understand that ‘money can buy things’. They should be taught to earn money and also use it wisely. Parents who teach the child to earn money by mowing the lawn or cleaning the garage fail to help the child to save and spend. Parents should take special care in teaching children about credit, bargaining and even debts. Most of all, they should be taught to save money if they plan to buy something big.

This habit could be started by opening an account for the child. Almost every bank in United States allow savings account for children. It is a very simple process and in fact, easiest bank accounts that will help young minds learn quickly. As a parent you can make the initial deposit and ask the child to deposit the saving money in the bank and also keep track of the balances by checking the statement. When they see that the balance grows as and when they deposit money, they will get enthusiastic about savings. When they understand this, as they grow older it will be easy for them to understand the different financial terms and options available.

These savings accounts for children apart from helping the child learn to save money also helps them managing the money and approaching money related issues cautiously. Many parents make the mistake of opening a checking account for young children. They fail to understand that the children will not be able to comprehend the concept of a plastic card as money or will use the check book. The child should at least be in the middle school or high school to understand the concept of plastic cards. Further, when the children touch and feel the real money they understand it better. This is somewhat related to the play-way method of teaching.

Parents should understand that before the child reaches adulthood, they are taught the importance of financial responsibility. This way they will not get into debt when they start handling money in the future. The best way and the basic way, is opening a savings account for the children.

Apart of opening a savings account and parents can lend some money to the children to buy something they wish and charge an interest to help the child understand the concept of debt. It is also important on the parent’s part to be very strict about interest collection and repossession of the collateral if the child does not pay back. When they learn it from home the hard way, it will help them in a long way in the future.

Other things that a child learns by using savings account include but not limited are:

• Learning to compute the interest earned from the savings account
• Learning the concept of debt management
• Learning the concept of plastic money (Middle School and above)
• Learning the concept of online transactions (under the guidance of a parent)
• Learning the importance of credit rating (high school and above)