Savings Accounts for Children
Polls indicate the average American saves less than 5 percent of his income. But children who learn about money management early tend to be better money managers and put more away in savings as adults. One way to help children learn about personal finance is to help them start their own savings accounts.
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Standard Savings Account
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In most cases, a parent must help a child younger than 18 open an account and will be a co-manager of the account. Some banks have minimum ages for opening an account in the child's name.
Educational Savings Accounts
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Children and their parents can invest money in a 529 plan to help pay for college tuition and related expenses. The plan can be a general educational savings account or a prepaid tuition plan, and rules vary from state to state.
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Warning
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If a family is getting some kind of financial assistance from the state, a child's savings account can count as an asset and reduce the amount of aid for which the family is eligible.
Considerations
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Because most children will be saving small amounts of money, it is important to find a bank that offers an account with small or no fees. Several banks, such as Key Bank and Wells Fargo, offer special savings programs for children.
Benefits
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A study conducted by the organization Junior Achievement found family talks about money management are correlated with higher amounts of savings in children and teens.
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References
Resources
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