You want your kids to learn about money, but you aren’t sure if opening a bank account for them and giving them access to real funds is the right way to do it. According to one money expert, it is — and if you wait too long to do it, you’re really just delaying the opportunity to teach your kids about money.
“Child psychologists believe that money habits are formed by the time we are seven years old, so age five is the perfect age to start teaching your kids about money and helping them open a bank account,” says Grant Sabatier, co-founder of BankBonus.
“Financial literacy is not part of many school curriculums, so it’s important to teach kids about personal finance as early as you can. Simple habits like saving their allowance money to buy something they really want, learning to put money into a bank account, and learning how to read and compare prices are a strong foundation to build on.”
Another benefit of kids using their own money, Sabatier says, is that it opens up conversations with them about topics like how other cultures live, how the economy works, and how people save up money to buy houses, cars, holidays and generally pay for their lives.
“It’s never too early to teach a child about money’s role in the world,” he says. “This is how a child can build a positive relationship with money with your guidance.”
Once you’ve decided to go ahead and open an account, there are a few factors to consider when choosing which bank you’ll use. Sabatier shares them ahead.
Parental controls vary from bank to bank, so it’s important to read about each account, Sabatier points out.
“Some banks allow you to change your child’s debit card spending limit directly within a mobile app, the ability to lock or unlock a debit card, and the ability to easily transfer money from a parent’s account for doing tasks like chores,” he says. “Many child accounts also have text or email notifications for parents to monitor any purchases.”
Low or No Fees
“Financial institutions with banking options for kids and teens usually don’t have fees or waive them for a specific time period after the account is set up, like until a child is 18,” he says.
“It’s worth shopping around for a free kid or teen account since there are many options available. If the bank where you have your own accounts charges a fee for their kid’s account, they’ll often waive the fee if you just ask to keep you a happy customer.”
Online or App Banking Tools
Seek out banking options that have saving tools and allow for budgeting, either online or ideally with a dedicated app, Sabatier says. You can then see how your child has been spending their money, and they can see, as well.
“Online banking makes monitoring accounts easy,” he says. “With just a few clicks on the app, you can transfer money, add a mobile, check deposits or verify your account balances.”
ATM Access and Use
While this, of course, should be the case when you’re looking to open even a bank account for yourself, check to see if the bank you’re opening it with charges ATM fees.
“Smaller banks don’t always waive ATM fees,” Sabatier says. “This means that you could be paying a fee if it is out-of-network or a foreign ATM. A few banks will waive the fee if you use their branded ATMs or if they’re a member of a larger ATM network like AllPoint. Knowing where your local ATMs are or choosing a bigger bank that’s more likely to have ATMs when traveling can be a money-saving perk.”