Your kid may have some sort of idea about a bank from watching TV or reading books but if you want to teach your child about how to manage money, then nothing is better than providing them a real-world practical experience. Thanks to the RBI (Reserve Bank of India), you could introduce your child to the financial system as and when they turn 10 by opening a savings account. Many banks such as Axis Bank have launched Future Stars savings account for kids.
Savings accounts for kids are much similar to the adult ones and are provided by private and public sector banks. There are slight variations, but mostly they are simple, safe and secure cash accounts. The interest rate on savings accounts for kids can be up to 4% per annum.
Opening a savings account for your kids offers them a peek into how banks and financial system work, additionally it gives your kids a place to stack up their allowances and birthday money. Instilling habit of savings is a valuable lesson which requires time. Once you put money into your kid’s savings account, you can teach them how to do basic banking chores. There are several benefits attached with opening savings accounts for your kids. Here we have listed some of those benefits:
1. Imparting Financial Education
Money is such a subject that most of us avoid it totally. You might find it taxing to discuss about, maybe you think it’s rude to discuss it or perhaps it doesn’t occur to you to talk to your child about money. You might have several reasons not to converse about money and with this cashless economy approach for handling everyday finances, there isn’t much opportunity. With a savings account for your child, you also bring an opportunity for discussion regarding money; how to earn it, what to use it and how to save it.
2. Imparting habit of savings
By opening a savings account for your kid, you encourage your kids to start saving money regularly, teaching them an essential skill they would have for life. Inculcating a habit of putting aside a part of your allowances and understanding that you to need to wait to buy something that imparts money management skills to your kids. Moreover, children as young as 3 year-old appreciate the concepts of saving, sharing and spending. Recent research shows that having a savings account to save for kids could create benefits for them later in life too.
3. Inculcating responsibility
The feeling of being responsible for your own money will make your kids a good guardian of their money into their adulthood. Having a savings account of their own would make them more responsible and can make them more sensitive towards money as grown-ups.
What is the real value of money? We have all heard the expression that money does not grow on trees but for children, it’s just a funny phrase which their parents say sporadically. By getting your child a savings account where they could deposit their money, your kids would start learning about the value of money.