It’s never too early to help your kids develop smart financial habits. Opening a bank account with your child can be a fun way to teach the ins and outs of saving and spending money at a young age. However, you may have some questions about how to open an account for a minor. The process is generally simple, and with this step-by-step guide, you’ll be on the path to saving for your child’s future.
Why open a bank account for a minor?
Opening a bank account for a minor has many benefits. Learning how banks work, creating savings goals and watching the money earn interest can help a child develop money management skills. Learning the basics of bank procedures and savings can help build your child’s confidence and sense of independence.
If your child is slightly older, there are even more reasons to get involved.
Opening a bank account can prepare your child for an independent lifestyle outside of the home. It may also better prepare your child to pay for college or understand how to access funds before moving out. If your child is looking to get a part-time job, opening a bank account can offer an opportunity to learn about direct deposit, paying taxes and creating short- and long-term financial goals.
What types of bank accounts are available for minors?
Generally, there are 2 common types of bank accounts available for minors: custodial and joint.
- A custodial account is owned by the child but managed by an adult until the child reaches the set maximum age, which can vary from state to state. Custodial accounts may also hold assets like stocks and bonds.
- A joint account is co-owned and managed by the adult and the child. Joint accounts can allow a parent to set rules and limitations on account usage and provide for easy transfer of funds. Joint accounts can be savings or checking accounts.
Step-by-step guide to opening a bank account for a minor
Opening a joint bank account with your child is generally a simple process. While it may be easier to open an account online, taking your child to a local bank branch can be a good learning experience. The bankers and tellers at the branch can answer questions and provide more detailed instructions for first-time account holders. Also, some banks may not offer online applications for account for minors. Here’s how to set up a bank account at your local branch.
