Teach Your Child to Save.
Let's face it: your child is probably not going to come out and ask you about savings account benefits or why he or she should get a head start on putting away money. That's why many parents feel it is their responsibility to introduce their children to learning how to save money at an early age. Depending on your own child's maturity level and learning style, you may find it's good to teach a child about saving when he or she starts making an allowance. But there’s really no "best age" to start, and there may not be such a thing as starting too early, either. It comes down to making the concepts fit your child’s level of understanding.
Perhaps it's surprising, but once they realize that money comes from making sure their chores are done, your kids may begin to understand the importance of saving intuitively at first. Even so, child psychology and financial experts agree that it's a good idea to proactively talk about saving even before they have that first dollar in their hands.
What Are Custodial Accounts?
Early discussions about savings account concepts with your children don't necessarily have to involve a special account you open at a bank, but for many parents, opening an account for their children makes sense. And while some banks offer special savings accounts for children, many aren't as robust as the types of accounts you as a parent could open for yourself, so why not do better? For some parents, a "custodial" account could be a better choice when your children are learning how to save money.
Although the laws vary by state, custodial accounts are ways for people to manage money that's technically owned by someone else. In the case of parents and their children, custodial accounts are generally opened by parents. Custodial accounts may have tax benefits for the parent, but again, the laws that govern these kinds of accounts vary by state. It's important to know how your state handles them. It may be a good idea to talk to a financial advisor familiar with your situation.
Ally Bank Can Help.
Once your child has a basic grasp of saving and spending money, consider demonstrating some simple banking tools. The concept of long-term savings is a fundamental one to begin with. With Ally Bank, it's easy to start a new savings account online. Whether you choose from our line of CDs, an Online Savings Account or a Money Market Account, any Ally Bank account can be opened by a parent as a "custodial account." Learn more at Allybank.com or call live, 24/7 customer care at 877-247-ALLY (2559) today.