The Importance of Opening a Savings Account for the Kids
Sat, April 10, 2021

The Importance of Opening a Savings Account for the Kids

There are a lot of ways about how parents can teach their kids about the proper handling of money. One is to show them that money should not be spent all the time and that there is virtue in saving / Photo by: Andriy Popov via 123RF

 

To provide for the family’s basic needs, parents work hard to make a living. They make sure that their children will always have food, clothes, and a decent education that are all necessary for their physical and mental development. However, children will soon grow up, move out of the house, and live by themselves until they decide to marry and have a family of their own. 

Parents must therefore ensure that their little ones will be bringing good values and education in their journey into adulthood. Enabling the children to become responsible adults later is one of the most significant accomplishments in life that every parent is hoping to achieve, aside of course from seeing them succeed in their chosen paths in the future. In order to achieve this, parents can use financial literacy to jump start their children’s education on the proper handling of money. There is also nothing wrong about showing kids the power and influence that money brings, but they should let them know the ways on how to handle money responsibly. 

There are a lot of ways about how parents can teach their kids about the proper handling of money. One is to show them that money should not be spent all the time and that there is virtue in saving. They can start by letting kids have their own piggy banks that they can use to save a portion of their allowance. Once it becomes second nature to them, then parents can introduce them to banks and how a savings account works.

A Little Knowledge Can Go a Long Way 

Having adequate knowledge about how things work in banking and finance can help kids in the future to help them avoid becoming dependent on credit cards, or worse, becoming buried in debt. Financial illiteracy is one of the reasons why many people don’t have a savings account in a bank, according to GoBankingRates, a personal finance news and feature website. It added that despite their country having a strong economy today, a lot of citizens of the United States are still having trouble saving money. 

In 2014, GOBankingRates conducted a poll on Americans to find out how much they save. Adults from across the country were asked a total of six questions to identify their spending habits and what hinders them from saving more. The results of the research showed that there was an increased percentage of people with little to no savings compared to the data that was gathered in the previous year. In 2019, 69% of respondents claimed that they have less than $1,000 in their savings account compared to 58% in 2018. 

Having adequate knowledge about how things work in banking and finance can help kids in the future to help them avoid becoming dependent on credit cards, or worse, becoming buried in debt / Photo by: Maxim Lupascu via 123RF

 

Why It Is Hard to Maintain and Grow a Savings Account

The survey also found that setting aside an extra amount of money seemed to be harder for Americans in 2019. In 2017, 57% of respondents said they had less than $1,000 in savings. That percentage edged up slightly to 58% in 2018. This year, it shot up to 69%. Included in that figure is the 45% of respondents who have no savings account to speak of. The percentage of respondents with $0 in savings hasn’t been that high since 2014 when GOBankingRates conducted its first survey on the subject.

In 2017, 57% of the respondents shared that they had less than $1,000 savings and that percentage increased by 69% in 2019. Included in that figure are the 45% of the respondents who mentioned that they have absolutely nothing in their savings account. 

The top reason they claimed as the reason why they are incapable of allotting money for savings is that they were living from paycheck to paycheck, with 33% of the respondents saying that they are struggling to save because of this situation. Additionally, 20% of them claimed that the high cost of living was also hindering them from saving money.

Start Them Young

Learning how to handle money knows no demographics. Everyone could be taught how to save efficiently. The percentages mentioned above should be enough to spur every family to educate each member about the value of money and the importance of saving. But before rushing to the nearest bank to open up an account, parents must consider a lot of things first, reminded Bank Rate, a consumer financial services company based in New York City. 

Opening a standard adult savings account will be appropriate even for the younger members of the family, but there are banks and financial institutions that offer a fun and teachable experience for kids about money habits. Parents can inquire about these offers and promotions on the bank’s website or via a quick visit to a local branch. 

There are several banks and credit unions that waive monthly fees and maintaining balance for the account if the owner is a minor. Parents can inquire about the perks and features that come with such an account. Look for a bank account with the highest APY and a low minimum balance requirement. 
As early as possible, parents must make sure that their children have adequate financial literacy that can prevent them from getting into a debilitating debt once they grow up. Having a savings account while they are young allows them to prepare for their future, especially if they wish to enter college.

Learning how to handle money knows no demographics. Everyone could be taught how to save efficiently / Photo by: Evgeny Atamanenko via 123RF