Once your child begins accumulating money, it may be time to set up a savings account. Having a personal savings account can be an effective tool for teaching your youngster about money management and the benefit of saving money. When kids learn these money management skills during childhood, they often carry them on into adulthood. The process of setting up a child’s custodial account is basic, but it does require parental assistance because your child is a minor.
Talk about the process of opening a savings account with your child before visiting the bank. Explain that keeping money in a bank account is safe because it eliminates the possibility of losing the money or someone stealing it. Tell your child the bank will pay her a small amount of money -- known as interest -- simply for keeping her money in the bank. Explain that your youngster will be able to withdraw money from her account if she needs it, and she can add money to it by making deposits at the bank.
Visit the bank with your child to set up the savings account. Bring identification for both you and your child, know your child’s Social Security number and bring the money you wish to deposit into the account. Usually only a minimal amount is needed to open a custodial account.
Sit with a bank representative to begin the process. The representative will ask for contact information, such as name and address. Allow your child to answer these questions, if possible.
Provide identification for your child when requested. As the custodian for the account, the bank will request your identification also. Provide your child’s Social Security number for the account.
Deposit the money into the account as the initial deposit for opening the account.
Receive a bank book to record deposits and withdrawals. Receive a receipt for the first deposit and check it for accuracy.
- A custodial account places both your name and your child’s name on the savings account. The interest earned on the account will connect with your child’s Social Security number, states the MoneyRates.com website. You maintain control of the account for your minor child and when your child reaches age 18, he will assume control.
- Call several banks near you to inquire about policies for minor accounts. Banks often offer incentives for young customers, so it’s useful to compare incentives and policies to enable you to choose the best bank for your child, advises the Investopedia website.
- Ryan McVay/Photodisc/Getty Images