Best bank accounts for kids

One of the best ways to teach kids good money management is by opening a bank account for kids and teach hands-on.
Bank accounts for kids
  • 6 minutes read article

What is a kid’s bank account?

Teaching kids how to manage money is great. They will learn budgeting, debits, and credits at an early age, setting them up for a prudent money management future. Kids’ bank accounts are bank products designed to teach kids exactly that with guidance from parents or another guardian.

 

What is the right age to open a kids’ bank account?

The ideal age is when they start asking about money. Probably around fifth to eight grade but the best age to open a kids’ bank account is to be determined by you the parent. No one knows your child better than you.

 

Benefits of opening a kids bank account

With the parent’s guidance, kids will learn prudent financial management and develop responsible financial habits. They will also learn:

  • They will learn the difference between needs and wants
  • Learn to budget and sticking to the budget
  • Learn how to save money
  • Create discipline on the use of debit cards

 

Kids will learn the real value of money, as you both monitor funds use.

Below: Click on one option below for best bank accounts

2 Types of kids bank accounts

 

Joint accounts

The best bank accounts opened for kids are actually joint accounts. The parent or guardian takes the lead opening a separate account from their primary account. You as the parent can then operate the account jointly with the minor.

You have to stay on top of all activity because of the risk of overdraft with a spending happy minor. Both account holders have equal access to the money unless you set up the account differently with the bank. Always stay in control 

 

Custodial accounts

As the name suggests, theses accounts are for the benefit of the child operated by someone else and not the kid. The adult, in this case, the parent or guardian has custody of the account. All the money belongs to the child. 

All money spent has to be for the benefit of the child and not for the adult custodian. 

 

Other types of kids accounts

 

Education accounts

Kids’ education accounts are not operated regularly like a bank account but are mostly savings and investment accounts. The goal is to save and accumulate savings for the benefit of the kid’s education fund. 

An example of an education account is a 529 plan. A 529 plan is a tax-advantaged savings plan designed to encourage saving for future education costs.  

 

Prepaid debit cards.

If the goal is to just teach kids about money management and debit card use, prepaid cards are a good option without having to go through all the legal bank opening requirements. Prepaid cards are available in a variety of places even in local grocery stores.

 

Open a kids bank account today

Your kid may not have much money today, but starting today and teaching them good prudent money management habits will be a lifelong investment for them. Start early learn early.

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