Parents are responsible for the welfare of their children. One of the ways through which they can show this responsiveness is by them opening investment accounts for their children. This article seeks to explain reasons why it is necessary to open an investment account for any child.
Since the purpose of opening investment accounts for children is to instill in them financial discipline, it is very important for children to engage in this process. This is of great importance since children don’t need to feel as though the concept of saving is mandatory.
Opening an account for your child should not be hurriedly done. This is so because there are many factors which both the parent and child should put into consideration. Parents have to clearly assess their own financial status to decide how best to support their child in this rewarding venture.
Worth noting is that any child can have an account opened for them. It is important for parents to have a certain percentage of their income or earnings dedicated towards saving for their child’s future.
The main reasons behind opening an account for a child are many and they include the need to enable children learn the principle of “sowing and reaping” at an early age.
To enable children feel that the bank account is for their own good, parents can do the following:
- Explain to the child why it is necessary for them to have an account.
- Discuss with the child the banking requirements.
- Allow children to choose the bank of their choice based on information you give them.
- Establish from them why they have settled for that particular bank.
- Discuss with your child the banking requirements before you open an account. For example, having their photo taken, choosing a day when you will go with them to the bank,and the need for them to give part of their daily allowances towards the bank’s smallest opening balance.
- Agree with them how much they should target to save each month, and how they intend to raise their savings. Children could use part of the daily or weekly allowances to meet this goal.
- Determine the short, medium, and long-term financial goals to enhance savings.
- Allow the child to actively engage in clubs set up by banks for junior account holders.
- Discuss with your child who will run the account with focus on deposits and withdrawals.
- Establish whether the bank has several outlets for you to choose the best branch to open the account.
In closing,all parents need patience as they commit to equip children with financial life skills.