There are different ways to help your children with understanding the concept of saving money and delayed gratification. For many parents who are grappling with teaching their children about money in an age where they usually get what they want whenever they want it, the idea of saving money can be a worthwhile lesson to pass on.
One way in which parents can avoid having to deal with starting from scratch when saving for their child’s education for instance, is by opening a bank account for their baby.
Why you should open a bank account for your baby:
One of the main benefits of opening a bank account for your baby is that no-one can withdraw the money from the account. Most savings accounts are set up with a parent as the custodian, so parents have complete control of the finances in the account.
It’s important to be diligent about saving regularly and that you don’t use the money for maintain the needs of the baby.
When saving for your child you want the most amount of time possible. Saving for tertiary education as early as possible can help to alleviate some of the financial pressure often faced by parents when their child completes high school.
Systematic deposits should be made into the account. This ensures that savings are consistent and the child can benefit from compound interest.
An emergency savings fund can be held at a bank. By opening a bank account for your baby you can save for any emergencies.
When the child can understand the value of money, they can understand the idea that saving up their money will allow them to make larger purchases. As the child grows older, you can illustrate the value of compound interest by showing them how soon you opened their account.
The sooner you can open the account, the longer it will have to grow and compound.