10 Reasons Why Gifting Your Child a Savings Account is the Best Gift You can Give for his Future

by Vinaya HS on October 21, 2017

in Finance

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Parents often open a bank account for their children at an early age to help them learn about saving and managing money. It also helps parents build a corpus for their child’s future.

Instead of toys and playsets, you may consider gifting a saving account on your child’s next birthday. Following are ten benefits of opening a bank account for your kid:

1. Helps kids develop the habit of savings A huge benefit of opening a bank account for kids is that it teaches them prudent financial habits from an early age. They may try to save a small amount received as pocket money or through any other source.

2. Acts as an investment strategy Kids have a huge advantage as compared to adults—time is on their side. Making small investments over a period of time helps in accumulating a substantial amount.

3. Provides perks and offers Such bank accounts provide a host of perks, privileges, and discounts on shopping of kid’s apparel, dining, and edutainment, besides others.

4. Secures your child’s education Gifting your child a bank account at an early age accumulates savings over a period of time. The corpus may then be utilized to meet educational expenses.

5. Teaches your child fundamentals of banking Opening an account for your child helps them have a basic understanding of how banking works. Numerous banks provide a passbook upon opening of an account. This helps children understand how to record deposits and withdrawals. It also shows them how their savings add up.

6. Easy to use It is only obvious that a bank account for children will be easily accessible. Besides, banks have also ensured to make the account opening process as easy as possible.

7. Benefit of attractive interest rates Your kids may enjoy attractive interest on the deposited amount. Some banks offer interest rates as high as 6 percent per annum, thus helping them grow their wealth. This encourages them to save more than often.

8. Requires low or no minimum balance Most banks either have low or zero balance savings accounts for kids. This means that the account may be operated without the need to maintain a minimum monthly average balance or quarterly average balance. Therefore, there is no imposition of non-maintenance charges in case of failure to maintain the minimum balance.

9. Provides a debit card Many banks offer a junior debit card, which may be used at an Automated Teller Machine (ATM) to make transactions or to purchase items at a store. This prepares your kid to use credit responsibly in the future.

10. Allows parental supervision Banks have certain limitations with which children may operate their account independently. This ensures that risks are limited. Kids may, therefore, operate their account with parental supervision. You may guide them and teach them efficient money management skills.

Opening a bank account for your kids is indeed the best gift you may give them. It helps them learn how money grows with time and ensures that they become financially independent in the future.




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