From setting screen-time limits to ensuring safe browsing habits, technology has changed many of the things parents need to teach their children at home. The way purchases are made has also changed, and kids inevitably will need to know how this process works. At Community West Credit Union in West Michigan, we’ll discuss when you should consider opening a kids’ bank account and offer tips for navigating this milestone.
Talking to Your Child About Money
Children are very perceptive – they see the adults in their lives regularly buying groceries, household items, gifts, and even toys for them, but they may not realize where the money comes from early on (or that it doesn’t just grow on trees). It’s never too early to bring up concepts such as spending, saving, and budgeting with your child. Even if he or she doesn’t earn a weekly allowance yet, talking through everyday purchases can bring some perspective to your spending habits. It also can help them start to think about how they would like to divvy up what’s in their own piggy bank at home.
According to the Consumer Financial Protection Bureau (CFPB), learning how to save can start at a very young age. You can always set up a savings account for your child as soon as they are born but figuring out when they will be able to take the reins depends on several factors unique to your family.
Things to Consider Before Opening an Account
Setting a foundation for financial literacy can begin at any age. It should be done gradually in a variety of age-appropriate ways, from counting coins during a math lesson with an elementary-age child to helping your teenager establish their first budget. But managing a child’s bank account from a credit union or other financial institution depends on the type of account opened and the maturity level of your child. A few questions to ask yourself include:
- Is my child able to count money and do simple math?
- Will my child need help using and keeping track of a debit card?
- Does my child regularly make purchases by themselves?
- Can my child responsibly handle app-enabled mobile baking services?
- Can my child track purchases, payments, and deposits on their own?
These and other insights can help you figure out when the right time to open a bank account is and which type of account you should choose.
Which Bank Account Is Right for My Child?
Depending on the age of the child, the first step might be to open a youth account for them initially, such as the Explorer Savings account, and manage it together. This can help them get a feel for what it means to save up for bigger purchases. Once your child gets the hang of saving, the next step can be opening a youth checking account, like the Explorer Checking account. With this type of account, your child will have access to their own debit card and can make purchases just like you.
Community West offers specialty services tailored to younger account holders, such as:
- No minimum balances
- No withdrawal restrictions
- No maintenance fees
These and other helpful features can help streamline usage for younger account holders, making youth-centered solutions ideal for those who are just starting to learn how to manage their money.
Tips for Opening Your Kids’ Bank Account
The lessons learned today can help set your child up for a successful future – and this is especially true for money management. Here are some tips for getting started:
- Celebrate account ownership: Treating this milestone as a step in your child’s life that’s meant to be celebrated can help make the experience a positive one.
- Stress the importance of responsibility: Stressing the importance of saving, budgeting, and routine tracking can help your child take this big responsibility in stride. With their own bank account, your child is in control of their financial choices.
- Incorporate their needs into your banking routine: While it may be easier to manage this first account by yourself, letting your child do the bulk of the work likely will be easier for both of you in the long run. But they may need a little help – especially if they can’t drive to the bank yet. Creating a shared banking routine can help make everyday management easier.
- Enhance the experience as needs change: If your child isn’t able to handle mobile banking at first or doesn’t have a job with direct deposit, they likely will in a few years. As their guide in these lessons, you can help them navigate each change in their financial routine in the future.
Find the Right Child Account at Community West Credit Union
At Community West Credit Union, we’re here for our community and our members. Let our team help you find the ideal kids’ bank account for your needs. We proudly serve the West Michigan area and offer a wide array of financial solutions. Contact us for more information today.