Your child’s first bank account
by Multi-Prêts Mortgages
What you’ll learn
- Financial literacy
- Applying basic concepts
- Opening your child’s first bank account
Experts agree that you should teach your children the value of money early on. If your child’s piggy bank is overflowing, it may be time to consider opening their first bank account.
Many financial institutions offer special banking programs for youth 16 and under. Even if your child only holds a small, symbolic amount, a well-supported banking experience can be positive, gratifying and educational. It will allow them to find out about budgets, spending, savings and interest.
It is wise to begin your child’s financial education at a young age by explaining basic money management concepts and using fundamental banking terms. This can be done by exposing them to your household’s financial situation and recurring expenses.
Applying basic concepts
The first step should be ensuring that your child recognizes the worth of each piece of currency, and that they understand what money is used for and where it comes from (namely, that it doesn’t grow on trees!) You should also make them understand that instant gratification is not always possible, or even desirable, and that they need to draw a distinction between their wants and their needs. This will help them integrate the concept of saving.
You can then start giving them a weekly or bi-monthly allowance. They can then start saving up to purchase material goods or complete a project they are interested in, either in the short or medium term.
The more open you are about your family’s expenses, the better your child will be able to compare the price of everyday items and distinguish wise purchases from impulsive ones. Once they can handle small purchases by themselves (at the convenience store, at school, during family outings, etc.), then they can surely evaluate what they can spend in regards to what they earn as an allowance and manage to save.
Opening your child’s first bank account
Once you feel your child is mature enough, you can explain the importance of having their own bank account. Start off by helping them set up a meeting, either online or through the phone, with an advisor from your financial institution. You should then ask them to gather all necessary documents and identification, and to keep them in a safe place. During the meeting, make sure they understand what is being discussed and that they are actively involved in the discussion with the financial advisor. They can even co-sign the form to open their account.
Financial institutions offer youth packages with different parameters, which can also be modified to suit parental preferences. They often suggest starting off with a savings account that you can control, but in which the money saved up belongs to your child. Once you ascertain that your child understands the differences between current transactions, and that they can correctly evaluate what they can spend in relation to what they earn, while still managing to save money, you can hand over the card while specifying that they can only use it under your supervision.
Finally, you should always discuss money in a transparent and open fashion, which helps your child become responsible and ensures a safe and enlightened path towards financial independence.
- Expose your child to your household’s financial situation and recurring expenses.
- The more open you are about your family’s expenses, the better your child will be able to distinguish wise purchases from impulsive ones.
- Financial institutions offer youth packages with different parameters, which can also be modified to suit parental preferences.