In these modern times of financial instability, it is easy to see how those with good financial sense are much more secure. That’s why it is of the utmost importance that we teach our children the value of money, and how to manage it. One brilliant way to prepare children for financial independence is by setting up a bank account for them. As such, a child is never really too young to have their own bank account, but at what age should you start contemplating this move?
As stated, you can never give your child access to a bank account too early. Many parents like to open an account for their children soon after they are born. This will be an account which is controlled by the parents and is a great place to invest cash gifted by relatives on birthdays and other special occasions.
Why Set Up An account For Your Child?
The reasons for setting up a bank account for your child are plentiful. To begin with, it makes it far easier to keep track of any money which they are gifted by friends or family and helps build a nest egg for them to use later in life. This money can eventually be spent on their first car, or even their university tuition, providing a great way to give them a stable start to their adult lives. Additionally, setting up an account for your child helps to make them feel independent and teach them valuable life lessons. Money management skills are something we all need and you can never start educating your child in the way of finances too early.
What Are The options?
There are many options out there regarding bank accounts for children and it is important that you look at all the options on offer:
- To start with, you’ll want an account which offers a decent level of interest and easy access. However, as your child grows you’ll need an account which changes with them, allowing you to give them access to their first cash card at an appropriate age and transfer full control to them. You should also look for accounts which provide rewards to the account holder to help give your children’s savings a much needed boost.
- One such option is a children’s Bonus Account from the Co-operative Bank. Any adult with a child under the age of 16 can set up a Bonus Account on behalf of their child. Alternatively, if you’re keen to give them the independence, any child between the ages of 7 and 17 years 9 months can set up the account in their own name.
- With a Bonus Account, the child can have access to a cash card which only allows them to spend money that is in their account. This is a good way to teach them about spending within their means.
- Governed by the same age restrictions as the Bonus Account, the Future Fund is more centred on the idea of building up your savings. It offers a flat AER rate of 0.25%, which is credited to their account annually. All you need to do then is show friends and relatives how to pay into it on birthdays and similar occasions.