Parents are responsible for the well-being of their children. One of the ways they can show this responsiveness is to open investment accounts for their children. This article seeks to explain the 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 financial discipline in them, it is very important that children engage in this process. This is of great importance because children do not need to feel as if the concept of saving is compulsory.
Opening an account for your child shouldn’t be done in a rush. This is so because there are many factors that both parent and child need to consider. Parents need to clearly assess their own financial situation to decide how best to support their child in this rewarding endeavor.
It should be noted that any child can have an account opened for him. It is important that parents devote a certain percentage of their income or earnings to saving for the future of their child.
The main reasons for opening an account for a child are many and they include the need to enable children to learn the principle of “sowing and reaping” from an early age.
To make 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 him to have an account.
- Discuss banking requirements with the child.
- Allow children to choose the bank of their choice based on the information you give them.
- Establish from them why they settled for that particular bank.
- Talk to your child about banking requirements before opening an account. For example, having his picture taken, choosing a day when you will accompany him to the bank, and the need for him to donate part of his daily allowances to the smallest opening balance of the bank.
- Agree with them on how much they should aim to save each month and how they plan to increase their savings. Children could use part of the daily or weekly allowances to achieve this goal.
- Determine short, medium, and long-term financial goals for increasing savings.
- Allow the child to actively participate in clubs set up by banks for junior account holders.
- Chat with your child who will manage the account with an emphasis on deposits and withdrawals.
- Find out if the bank has multiple outlets so you can choose the best branch to open the account.
In conclusion, all parents need patience when making a commitment to equipping their children with financial life skills.