Brought to you by: Breez DeGuzman

Economic circumstances can change rapidly for families and individuals. To help prepare for this reality, you can begin teaching children about money and financial responsibility while they’re young.

You may think your children are too young to learn about money, but unless they’re preschoolers or younger, this isn’t the case. In fact, the earlier you can start teaching children about money, the better off they will be because they’ll have practical knowledge and can learn to handle money wisely now.

The following seven benefits of opening a traditional bank account for children may encourage you to start the process.

1. Teaches them about money – Opening a traditional bank account will allow children to learn basic accounting principles. Let them be responsible for keeping their own account register. This may also teach them that everything costs something – in money and in time.

2. Prepares them for the future – Giving children a weekly allowance will prepare them for being paid as an adult and is a tangible way to teach them about money management. Teach them how long they’d have to “work” to purchase an item; those $100 shoes they want would cost 10 hours of labor to pay for if they make $10 per hour. Ask them if the shoes are truly worth that much time and effort.

3. Teaches them about saving – Having your children put money aside from their allowance teaches them to save. This teaches responsibility with money, budgeting by saving for something they want, and patience to wait until they have all of the money to buy that item.

4. Teens can learn to do their own banking – This is especially important if your teen does odd jobs to earn money or is working a part-time job. Having their own bank account enables them to keep track of their money and will teach them to be responsible and put money aside rather than spending it all.

5. Teaches them to save for the future – If your child is interested in going to college, having a bank account gives them a place to put money aside. Having a savings account is also a good option if they want to purchase a car. By having the account now, it will teach them to save for big ticket items they’ll want or need.

6. Savings accounts for minors are tax free – Start the account in your child’s name and with their social security number and you won’t be responsible for taxes on any interest the account earns. If your children receive cash gifts from family or friends, they can add to the account at any time. Of course, if your children are minors, an adult will have to be on the account as well.

7. Allows them to see where family money is spent – Setting up a traditional bank account for your child will enable them to see the process of earning an income and can teach them how you choose to spend that income. You may even want to consider getting your children’s input when you have discretionary funds.

One of your goals as a parent may be to teach your children to be financially responsible. Helping them open a bank account is a great start to teaching them about money and how to use it wisely.

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Tags: Bank Account, Children, Traditional Bank Account

This entry was posted on Friday, September 25th, 2009 at 8:57 pm and is filed under All About Young People, Children's Savings, Family, Money Strategies. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.