Author: Hannah Henry
Published: Tuesday, 11 May 2021
A study by Bankrate in 2019 found the average American adult will stick with his or her bank for slightly over 14 years. Additionally, for millennials (ages 24-39 at the time of the survey), the study found they had their checking account at the same bank for more than nine years (back in 2020). With the early investment in their financial future, the future is bright for young savers.
Below we will discuss how you can set your child up with his or her first bank account, the benefits, and tips for how you can establish smart financial habits!
Ideally, when you are looking at opening a bank account for your child, the parent or guardian will need to be listed on the account as a joint or custodial owner. In a joint account, you and your child will have equal control of the account. In this type of account, there are two or more owners that have rights to withdraw, deposit, and manage the account’s funds. To learn more about a joint account, check out ValuePenguin’s article. A custodial account is maintained by a “fiduciary responsible party” (the parent or guardian) on behalf of the “beneficiary” (the child/minor). To learn more about a custodial account, check out Investopia.
Should you ever need to exchange funds with your child, you want to ensure you can do so with ease. Another reason you will want compatibility with your bank institution is to ensure you can monitor the activity within your child’s bank account.
Most banks will let you know what you need to set up a bank account in-person, over the phone, or online when setting up an account.
Here are some of the primary documents you will need:
Once you have set up a bank account with your child, be sure to go through their monthly bank statements with them. This will help to get them in a routine of checking on their financials but also help them to understand the essential areas within their bank account they should focus on. Check out JA’s budgeting income and spending worksheets to help your child navigate their financial goals.