Money is important. It makes the world go round, and setting a child savings account can help them in the future. When it is your child’s birthday, and they receive money from family members, what do you do with it? Do you buy them sweets daily? Do you put it in a money jar for when they desire something new? You shouldn’t do either, and here’s why.
- Buying sweets is never a good thing, not even as a ‘treat’. They pose no health benefits and inflict harm to teeth, organs and increase the chances of illness. Whilst, also setting them up for an addiction to sugar later on.
- Money jars are okay, but they will entice you to spend the money that’s inside. Whilst you could quickly spend the £20 that you got, you don’t have too. You could open up a bank account in trust for your child, they won’t be able to use any of the money until they are 18 years old or old enough that you think they would be responsible with the money. However, you can still use it for them, withdrawing money if you need too.
The main benefit of this type of account is that you can save money for their future. This money will be very helpful for when they are older and more responsible. By waiting until the right moment, when they are full of ambitions, dreams, or when they may want to learn a new skill such as going to university or learning to drive. It can be a great surprise, taking a lot of stressors of their shoulders or making their lives much easier.
Another benefit for these types of accounts is that they generally develop a higher interest than most adult accounts do. You could expect around a 3% interest on balances up to £2,000 which is approximately £60 per year just for having the money sitting in the bank, that’s better than spending the money instantly on sweets right? This interest from your child being just born all the way up to eighteen years old could bring an additional £1,080. The question then becomes, why not?
To get it set up you will need to go into your bank with a photo ID or passport. You may need to bring your child with you and you might also need some proof of address.
Depending on the bank you may need to book an appointment, but this will obviously vary from company to company as well as other factors such as how busy it is. Remember, you won’t be the only person transferring money to your child’s bank, the trust account offers a great place for the family to be able to transfer money for events such as birthdays and Christmases instead of just giving cash in cards.