Opening a savings account for your child is a great idea. Interest rates may not be that good at this time, but getting into the habit of savings is a really good lesson for them to learn. It's one part of teaching them to manage money in a responsible way. Here are some great reasons to start a savings account for your child …
1 Good Habit
Opening a savings account for your child will start them off on a sensible attitude towards money. They'll learn that it's better not to spend everything they 'earn.' If they put some or all of your money in their savings account, they can see the interest being added and the total growing every year. Try to encourage them to leave it there, rather than spending it.
2 Compound Interest
Interest rates may be low, but the good thing about compound interest is that the following year interest will be paid on the interest, as well as the capital. So over time, the account balance grows. Because of compound interest, the earlier you open an account for your child, the better.
3 For Their Future
If your child is older, you can encourage them to save by showing them the benefits it will have for their future. If they have career plans, it will help them with study costs or a training course. Maybe a horse-mad child would like to buy their own horse one day. Or they could use the money for a house or car. Teach them how saving will help them achieve their goals.
4 Too Many Toys
Young children often receive far more toys than they could possibly play with, and many are simply put aside and ignored. If your children have a lot of generous relatives, ask some of them to consider putting money into a savings account instead (don't forget to ask very nicely, as some people don't like giving money).
5 Distant Family
Many people have family who live a long way off, so sending gifts can often cost as much as the gift itself. If you open a savings account for your child, relatives can pay some money into the account instead. Your child's savings are boosted and your relatives have a hassle-free way to give a gift, so it's convenient all round.
6 Financial Education
It's every parent's responsibility to teach their children how to manage money. Doing so will give them a good foundation for their adult life and help them avoid getting into financial problems. People's attitude towards money is often formed during their childhood, so get them into the savings habit as part of their financial education. And set them a good example!
7 Safe Way of Saving
Opening a savings account is a safe way of saving for a child. You don't want to invest their money in something risky like shares, and they don't usually have enough money for that kind of investment anyway. So stick to boring but simple savings accounts so that your child's money is safe.
Saving their money may not seem very interesting to a child, but there are ways of getting them enthused by the idea of putting their money in an account. Encourage them to see the advantages of saving up for something that they want to buy, or just saving their money for an unspecified purpose. It'll really be a big help to them in the future. What would you have done with a savings account if your parents had put money away for you?
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