How and when to open a bank account for your kids

As a parent, you want the best for your kids, and that includes setting them up for financial success in the years to come. One of the best ways to help your kids build their future nest egg is by setting up a kid’s bank account. But when’s the right time to set up your children’s bank account and what’s the best way to go about the whole process? 

We’re here to help guide you through the different options and how to establish a bank account for your little one.

When’s the best time to set up children's bank accounts?

There are no hard and fast rules about when you should open up a bank account for your kids. While some people like to maximise their kid’s savings by opening up baby bank accounts when their bub is born, others prefer to set up their children's bank accounts when they’re a little older to help teach them the value of money. 

Although there’s no golden rule as to when you should set up a bank account for your children, it’s well worth hunting around to find the best deal to help them get ahead. Many kid’s bank accounts offer a number of special features like no or low fees, bonus interest rates and parental control, so be sure to do your research to find an account that you think is best suited to your child.

How to open a kid's bank account

Once you’ve found the right bank account for your child, when it comes to actually setting up the account, the process tends to differ depending on how old they are.

For kids aged 13 years and under, they’ll generally need a parent or guardian to help them set it up. Similarly to how a joint bank account is established. For children aged 14 and over, many banks allow them to open a bank account themselves. 

If you’re opening a baby bank account, you’ll need to provide a form of ID both for yourself and your newborn, like their birth certificate. The birth certificate can also help to prove you’re their parent or guardian should the bank require it.

Most banks require some form of identification to open a baby or kid’s bank account, so it’s usually handy to have your home address, your child’s birth certificate and a copy of your own ID, like a driver’s license or passport, on hand to streamline the process. 

Tips for getting your kids interested in money

Let’s face it, not all children are excited to start their financial journey, but the process of setting up a kid’s bank account can help to teach your child the importance of financial literacy. Depending on your kid’s age and level of understanding, there are a few things you can do to get them interested in setting up their first bank account and establishing their savings.

1. Be transparent

Discussing money openly can be uncomfortable for some, but it can provide a wealth of information and knowledge for young ones who are starting to learn about finances. Kids are naturally curious, so chances are they’ll get the ball rolling by asking you questions while you’re running errands or shopping for groceries. Use these opportunities to teach them about how you earn money and the difference between needs and wants when it comes to spending money.

2. Get them involved in the process

One of the best ways to get your kids interested in money and saving is by getting them involved in setting up their own bank account. Take them into your local branch so they can see how it works firsthand. You can use this process to demonstrate the role of a bank. Show them how to check their account balance and introduce them to the concept of interest and how it can impact on their own savings.

3. Use the account to pay their pocket money

Do you give your kids pocket money or use financial incentives to get your kids to help out around the house? Rather than giving them cash as pocket money or payment, why not transfer the money into their bank account instead? 

Get your kid’s into the habit of regularly checking their account balance so they can see their savings grow, especially if it’s a result of their own hard work. 

4. Help your kids to set savings goals

Goal setting is one of the best ways to boost motivation, especially when it comes to saving money. Helping your kids to set savings goals can really encourage them to start saving.

Is there something they’d like to buy? Break the total cost of this item down into smaller, more manageable amounts to help them set regular savings targets to help them work towards their final goal. Not only is this useful for teaching the basics of budgeting, but it can also help to demonstrate the value of money.

Benefits of opening a kids bank account

There are a number of different benefits to setting up a kid’s bank account from establishing their savings early to introducing them to basic financial concepts. When it comes to money, learning about common money concepts from a young age can help to instill financial literacy so you’re kids avoid making costly financial decisions down the line. Here are some of the top reasons why you should consider setting up your children’s bank accounts.

1. Start your kid's savings

The sooner you set up your kid’s bank account, the earlier you can help them to start saving. Whether you set up a baby bank account or wait until your kids are old enough to help set up their own children's bank account, some people believe the sooner they get started the better. Plus, some children’s bank accounts also offer bonus interest rates, so the longer the account is open and being deposited into, the more your kids stand to save over the life of the account. 

2. Introduce them to money concepts

Managing money is a hugely important skill that can be taught early on in life. Use setting up a bank account and saving money as opportunities to teach your kids basic financial concepts which can help them to build positive money habits.

Setting up a savings account can help them to learn about the concept of interest and how this can help them to build their wealth over the long term. You can also use a bank account to teach them about the importance of common financial concepts like budgeting, saving, investing and consciously spending. 

3. Encourage financial independence

Teaching your kids how to save and effectively manage their money is one of the best ways to encourage financial independence from a young age, which will set them up for success in the future. From setting up their own business to living a life free from the stress of debt, there are so many benefits to understanding the importance of financial independence.

There’s no perfect time to set up your children's bank accounts, but getting them involved in the process from an early age is a great way to kickstart their financial independence and teach them basic money management concepts. Although these lessons are priceless while they’re young, they will pay dividends in the future.