Whether developing a healthy dietary habit or ensuring proper schooling and learning environment, you always want the best possible option for your child. You want to prepare your child to successfully face any challenge after growing up.
Financial education should be no different. You must educate your child about banking and finances so that he/she may achieve a degree of financial literacy as early as possible. Opening a child savings account can be a convenient way to achieve this goal.
What is a Child Savings Account?
A savings account can be opened for children by their parents or guardians.
The eligibility criteria for opening a child savings account are that the child should be:
- A resident Indian.
- Below the age of 18 years.
Why Should Your Child Have a Savings Account?
- Learn to keep track of spending
As your child grows up, you can consider giving pocket money to him/her. You can open a bank account for your child and then give the pocket money through that account.
You can further encourage your kid to pay his/her expenses through this account. Your child can learn to track small financial transactions through this exercise.
- Inculcate saving habits
You can inculcate the habit of saving in your child through a kid’s savings account. As your child grows, you can start teaching him/her the virtues of good saving habits by subtly pointing out the important and unnecessary expenses.
You may also reward your child if he/she can save a certain amount of money and show you through the bank statements to claim the reward.
- Teaching patience
Once habituated with operating a savings account, your child may learn to be patient with the savings before spending without thought.
A habit of performing formal transactions will deter them from impulsive buying habits and encourage them to plan before buying and wait until the plan is executed successfully.
- Prioritising goals
Whether to own a cricket bat or to party with friends. Your child could gradually learn to prioritise the goals and act accordingly.
Furthermore, your kid might develop a positive sub consciousness toward asset building in future.
- Learning the value of money and wealth creation
Spending Rs 500 or holding the amount for a year to earn interest on it. Which one is better? Your child might learn the fundamentals of investing and wealth creation through a child savings account.
With time, you can also help your child in understanding the power of compounding and how small savings can contribute significantly to create wealth.
- Working of the banking system
The banking system and its working can seem intriguing to many uninitiated persons. However, you can acquaint your children and teach them how to successfully navigate the system by gradually introducing them to the system through the children’s bank account.
Individuals, who have the knowledge and experience of handling a child bank account from their childhood, are likely to easily integrate themselves into the banking and finance system once they reach adulthood.
- Using safety and features
By operating a savings account from an early age, your child can get exposure to various features such as using an ATM card or performing online transactions.
This, in turn, can help your child be aware of adhering to safety protocols like keeping the banking password a secret or not sharing the ATM pin with anyone.
Ability to Manage Personal Finances
By operating a child savings account, your child is likely to gain valuable practical knowledge in managing personal finances. The child might get a broad idea of proper financial planning due to the valuable lessons and experiences that they gained while managing their savings account.
Parents help their children in taking their first steps in walking, reading and writing. It should not be different in financial planning. Open a savings account for your child and help him/her embark on the exciting journey in the world of finances.
You can now open a Junior Savings Account for your child with Kotak Mahindra Bank. Apart from teaching the benefits of savings, it also offers a host of privileges for your little one.