How to Prepare Your Child for Their Very Own Checking Account

As a parent, it’s your responsibility to start planning for your child’s financial future as early as possible. No age is too young to teach them about financial responsibility. And you can do so in simple everyday living. However, you may want to start thinking about giving them some independence and opening a checking account for them is a great first step.

If you’re unsure about how to start this process, don’t fret. This is your guide to building a solid financial foundation with checking accounts for your children.

Why Open a Checking Account for Your Child in the First Place?

You may be thinking it might be easier for you to have full control over your child’s finances and it may not be necessary to open a separate account for your child. However, there are a handful of benefits to opening an account just for them.

Prepare for the Future

Separating your finances from your child can give them a sense of independence and responsibility. This is important to implement early so they can continue with confidence in their later years. After practicing financial responsibility and developing these skills, your child will already have good money habits in place when they start officially earning a paycheck.

Additionally, if they have something they want to buy themselves, you can encourage saving and goal setting to finally reach their target.

Convenience

Allowing your child to have their own checking account often comes with the conveniences of the digital age. That includes online and mobile banking so your child can see and/or organize their finances in real time. Additionally, a debit card can act as a record of their spending so you can keep a watchful eye on their habits.

Security

Keeping your child’s money in a checking account is likely significantly safer than having physical cash at home. This can help them (and you) stay on top of their finances as they’re building their money skills. Many banks are also protected by the Federal Deposit Insurance Corporation (FDIC). In addition, you may have parental controls that let you set spending limits or even approve transactions.

How Can You Teach Your Child About Money Before Opening an Account?

Children often learn by observing what you’re doing around them. That’s no different from learning money habits. It also doesn’t hurt to directly teach them money literacy.

Involve Them in Your Everyday Routine

Going grocery shopping, paying bills or even getting you and your kid a little treat now and then could all help your child learn money responsibility. Tell them why you’re buying one brand of cereal over another, how often you pay utilities and why this number might change from month to month or explain how you save enough money for treats in your budget. Spell out money transactions as they come along and as often as possible, so your child understands the importance of saving and spending when appropriate.

Encourage Saving Habits

Let your child know how saving is a lot like waiting for something that’s worthwhile. A goal to reach can be fulfilling and can help them develop the budgeting skills needed later in life. As mentioned previously, if they have a big-ticket item on their wish list like a toy, video game or even a car if they’re older, they’ll have something to look forward to and be able to decide if other purchases are worth it to wait longer for their goal.

Normalize Money Talk

For some, talking about money in front of children can feel taboo. Maybe you think they’re too young to understand or that they won’t retain anything you’re teaching them. But remember, children are smarter than you think. Take some time to sit them down and share your own habits, skills, mistakes and experiences with money to help make the world of finances less intimidating. This can help make your child become more comfortable speaking with you about money in the future.

What Should You Look for in a Checking Account for Your Child?

When you decide that opening a checking account is the best decision for your child, you may wonder what you need to look for in an account. This varies between your child’s needs and goals so keep this in mind when you’re doing your research.

Monthly Fees and Minimum Balance Requirements

In general, it’s beneficial to find a checking account for kids with no monthly fees or minimum balance requirements (at least for their very first checking account). Fees shouldn’t hold your child back from their financial goals and habit development. If they see that their balance is less than expected, they might feel discouraged.

Online Access and Physical Locations

Your child is living in the digital age so easy online access and/or a dedicated banking app can help them view and manage their finances quickly and easily. This also allows you to keep a close eye on their money as they’re getting used to managing it themselves and allow you to set up parental controls if you choose to.

A bank with many physical locations could also be beneficial. You could teach your child where they can go if they need help from a real person, what their bank layout looks like and what the employees there do for their customers. You can also teach them how to physically deposit a check or cash at the bank, so they know how to do it themselves in the future.

Rewards and Perks

A checking account that comes with rewards and perks may help incentivize your child to build more of their savings. Some accounts offer cash bonuses, cash back on some debit card purchases, ATM-fee reimbursements and more. Keep in mind that many checking accounts with rewards require activity minimums so it may not work for your child depending on how frequently they may use their account.

Money Habits Last a Lifetime

Teaching your child about finances and money is often an intimidating task that requires a lot of work. But the benefits can be worth it for their independence. Invest in these valuable life lessons early on to help them far into the future.

Intended for general informational and educational purposes only and should not be construed as financial or tax advice. For more information on financial planning or investment advice, consult a registered investment advisor or financial planner.