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4 Reasons to open a savings account for your child
It’s a good bet that you grew up with a piggy bank; your child may have one as well. While this childhood icon provides a good visual reminder for saving money, don’t forget to show your child how to do grown-up saving as well.
Here are 4 reasons to open a savings account for your child:
1. It teaches them about the importance of saving.
When children grow up knowing that saving money is important to your family, it will become important to them. Talk about money. Help your child understand how you make decisions about spending and saving the money you earn. Take your child with you to a Global Credit Union branch. Show them how to conduct a transaction at the ATM or make a deposit so they learn how banking and saving work together. The experience will help them feel confident, grown up, and responsible—feelings that many children crave.
Did you know? There are numerous books available—everything from Curious George Saves His Pennies to The Berenstain Bears’ Trouble with Money—that you can read to your child to help them learn about money. Visit your local library for suggestions, or get ideas online from the Consumer Financial Protection Bureau.
2. It provides a safe place for them to save.
How tempting will that piggy bank be when your child wants to buy something? A Global Credit Union savings account helps keep your child's money safe from impulsive spending. Plus, all savings accounts at Global Credit Union, including those for children, are federally insured by the National Credit Union Administration. Having their own account also keeps your child’s money separate from yours, and account balances gives them a clear visual of how their savings are adding up.
3. It allows their money to grow over time.
Time is on your side when it comes to saving money for your child. A savings account at Global Credit Union earns competitive interest rates, which allows your child’s savings to grow. Show your child how this works; use blocks or other visual aids to explain how interest continues to add up over time. And with regular deposits—even small amounts—their account will grow even more quickly.
4. It teaches them how to set goals.
When you talk about a savings account with your child, talk in specific terms about what the money can be used for someday. It’s important to use examples they can relate to: “so you can attend college like Aunt Julie,” or “so you can buy your own car when you’re 16 years old” or something similar. This helps your child visualize the importance of saving for something they value.
Did you know? According to the Center for Social Development at Washington University in St. Louis (WUSTL), children with college savings, even with an account of less than $500, are three times more likely to attend college and four times more likely to graduate than those without any college savings.1
Then what?
Once you’ve opened a savings account for your child, take these important next steps:
- Model good behavior. Let your children see you making good decisions about money. When you set aside a portion of your income for savings, talk about it, and let them know why you're doing so.
- Take your child with you to the grocery store. Show them how to look for items on sale, then go to a branch to deposit the money you just saved.
- If you give your child an allowance, show them how to set aside money for savings. Have them set goals for purchasing a coveted item and have them pay for purchases with their own cash.
- If your child gets money for birthday or other gifts, encourage them to set aside a portion of it for savings before spending the rest.
Parenting experts agree that it is much easier to teach young children good habits than it is to wait until they are teenagers, and saving money certainly qualifies as a 'good habit.' It's never too early to start.
