5 tips for parents opening a bank account for kids

August 05, 2020

It’s common for children to observe and model their parents’ behaviors. Smart money management is no different. Here are some helpful tips to jumpstart your children on the path to financial success.

 

These days, we’re all spending more time at home—especially our kids. This makes it an ideal time to start giving children a financial literacy foundation that can help keep them stable and successful for the rest of their lives. Teaching good financial habits can start sooner than you think.

Children start to grasp the concept of saving when they’re old enough to slide coins into a piggy bank. Around kindergarten, they have a sense that money is important. When they ask for allowance or want to buy a coveted toy, it makes sense to open a bank account and start teaching them money management basics – and values around spending and saving.

Minor children by law can’t open a savings account. They need a parent or guardian to set up a custodial or joint account. A custodial account is the property of the child, but managed by the parent until the child turns 18. With a joint account, parent and child both have access, but the adult can supervise or limit activity, say, putting a cap on the amount the child can withdraw the account by actively monitoring the activity. Both types can later be converted to their own accounts.

As you shop around, look for a bank that encourages young savers with low (or no) fees and balance requirements. And just as with your money, make sure your child’s account is FDIC-protected.

Beyond those basics, here are five tips for getting your child excited about banking – and starting on a lifetime of sound financial habits.

 

1. Teach children why it’s important to save money.

Tie the concept of saving in a bank account to waiting for something that’s worthwhile. If you’re in line for an ice cream cone, remind them the result is a treat they really want. Saving is similar; you save for something you’ll want or need later on. With older kids, help them think of savings in terms of goals, achieved over time. For instance, they may want to plan for purchasing their own car, or be prepared to help with college costs.

 

2. Make opening a bank account a concrete, fun experience.

It’s tempting to look for online banking or to manage your child’s money yourself. But help kids participate in setting up an account. Call your bank in advance for an appointment, and have your child carry in necessary information (see Items to bring to the bank). Some kids are thrilled to participate in a business meeting where they’re center stage, but help out a shy child.

Also, ask if it’s possible to tour the bank; some allow kids a peek at their vault or room of safe deposit boxes, aka treasure chests. It never hurts, either, if tellers offer a lollipop after transactions, or if children can run the family’s change through a coin-sorting machine. These experiences make the bank feel welcoming and enjoyable, which helps a banking habit stick in future.

 

3. Add bank stops into your shared routine.

Incorporate a stop at the bank to deposit allowances, earnings and gifts part of your family’s regular routine. More broadly, remember you’re modeling financial behavior all the time, whether you intend to or not. Talk out loud about your spending and saving decisions, for instance, when you add money to a family vacation fund. Identify ways you save at the grocery store, and point out when something is a splurge. All this helps children learn the value and uses of money.

 

4. Give incentives.

Nothing motivates financial awareness and a solid savings habit like interest or matching funds. Show your child how earning interest works: for simply leaving her money in the bank, she earns a bit more of it. If you want to reinforce saving even more, consider matching your child’s savings when, say he’s saving for a particular goal. “If you save $50 toward your ice skates this month, I will match that amount.”

 

5. Add complexity as children grow.

A six-year-old may not be ready to read her bank statement and reconcile her account, but by the time she’s 10, she could give it a try. By the time children get their first jobs, they will be learning about taxes. And by the time they have their first email accounts, they should be aware of financial scams and schemes that seem too good to be true. By starting their financial education when they’re young, they’ll gain both confidence and savvy when it comes to making sound decisions.

 

Items to bring to the bank

What you need to have to open a joint account with your child:

  • Your child’s name, birthdate and social security number 
  • Your picture identification, such as a driver’s license or passport
  • Your social security number
  • Personal information such as address, phone number, email address
  • An initial deposit (cash, checks) as required by the bank

 

Interested in opening a checking account for your children? Explore U.S. Bank options.

Related content

How to prepare for healthcare costs in retirement

The connection between your health and financial well-being

Is a Health Savings Account missing from your retirement plan?

How to decide when to shop local and when to shop online

Retirement expectations quiz

What financial advice would you give your younger self?

Starting your homebuying journey: Tips from a U.S. Bank Goals Coach

Working with an accountability partner can help you reach your goals

Growing your savings by going on a ‘money hunt’

Recognize. React. Report. Don't fall victim to financial exploitation

Travel for less: Smart (not cheap) ways to spend less on your next trip

Multiple accounts can make it easier to follow a monthly budget

You can take these 18 budgeting tips straight to the bank

Certificates of deposit: How they work to grow your money

9 simple ways to save

Are savings bonds still a thing?

Financial gifts can be a valuable – and fun – choice for the holidays

How I did it: Learned to budget as a single mom

5 financial goals for the new year

Which is better: Combining bank accounts before marriage — or after?

Does your savings plan match your lifestyle?

Don’t underestimate the importance of balancing your checking account

Do you and your fiancé have compatible financial goals?

Is it time to get a shared bank account with your partner?

Checking and savings smarts: Make your accounts work harder for you

Should rising interest rates change your financial priorities?

Saving vs. investing: What's the difference?

How to cut mindless spending: real tips from real people

What types of agency accounts are available for investors?

Your 4-step guide to financial planning

How to manage your money: 6 steps to take

6 common money mistakes to avoid

Key components of a financial plan

How to choose the right custodian for your managed assets

Webinar: 5 myths about emergency funds

Webinar: Train your brain for smart financial habits

How compound interest works

5 things to consider when deciding to take an unplanned trip

5 myths about emergency funds

5 reasons why couples may have separate bank accounts

A who’s who at your local bank

Adulting 101: How to make a budget plan

Allowance basics for parents and kids

Finding a side gig to fund your goals

Helpful tips for safe and smart charitable giving

Tips for working in the gig economy

Here’s how to create a budget for yourself

5 tips for parents opening a bank account for kids

U.S. Bank asks: Transitioning out of college life? What’s next?

6 pandemic money habits keep for long term

How having savings gives you peace of mind

How to best handle unexpected expenses

How to manage money in the military: A veteran weighs in

How to save for a wedding

It's possible: 7 tips for breaking the spending cycle

Personal finance for teens can empower your child

Tips to overcome three common savings hurdles

Webinar: Uncover the cost: Wedding

Webinar: Uncover the cost: International trip

What military service taught me about money management

Your guide to starting a job: Resources to help along the way

Building a financial legacy for your family and community

First-timer’s guide to savings account alternatives

How to increase your savings

U.S. Bank asks: Do you know what an overdraft is?

Money Moments: 8 dos and don’ts for saving money in your 30s

Myths vs. facts about savings account interest rates

Essential financial resources and protections for military families

Bank from home with these digital features

Practical money tips we've learned from our dads

What’s in your emergency fund?

Tips to raise financially healthy kids at every age

Money management guide to financial independence

5 ways to spring clean your finances and save money year-round

Saving for a down payment: Where should I keep my money?

Beyond the mortgage: Other costs for homeowners

How to Adult: 5 ways to track your spending

3 steps to prepare for a medical emergency

What you need to know as the executor of an estate

College budgeting: When to save and splurge

6 questions students should ask about checking accounts

How to save money in college: easy ways to spend less

Checklist: How to gain financial independence from your parents

The A to Z’s of college loan terms

Recognize. React. Report. Caregivers can help protect against financial exploitation

Is online banking safe?

Identity stolen? 5 steps to take immediately

8 tips and tricks for creating and remembering your PIN

How to use your unexpected windfall to reach financial goals

Dear Money Mentor: How do I pick a savings or checking account?

Solutions banks can offer during the COVID-19 pandemic

Webinar: Mindset Matters: How to practice mindful spending

Webinar: Smart habits and behaviors to achieve financial wellness

What I learned from my mom about money

Make your business legit

How to choose the right business savings account

Meet your business credit card support team

Does your side business need a separate bank account?

How to choose the right business checking account

Break free from cash flow management constraints

Protecting cash balances with sweep vehicles

What corporate treasurers need to know about Virtual Account Management

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.

U.S. Bank is not responsible for and does not guarantee the products, services or performance of U.S. Bancorp Investments, Inc.