Babies don’t take financial classes in the womb. But, as they grow, financial lessons can be passed down to them. kids should be taught to develop the habit of saving money instead of spending needlessly (as they’re likely to do).
Kids can learn to be committed savers if their parents can lead the way because, at this formative age, kids are most receptive to learning.
Thankfully, many financial institutions in Canada offer services for children. They operate savings accounts that help kids to learn the value of personal banking and money management at an early age.
Most savings accounts for kids are designed to cater for them until they are 18 or the age of maturity in their province.
What You Should Know Before Opening a Savings Account for Kids
Before opening a savings account for your child, here are some things to consider.
- Your Child isn’t too Young
As a parent, you should understand that the early bird catches the worm. In other words, your child isn’t too young to have a savings account. Good financial habits should be taught to kids at an early age. They should begin to learn how to play an active role in saving.
- Joint Access to the Account
Both the parent and the child will have access to the account.
Since most banks specify that someone should be 18 years or older to open a savings account, a parent/guardian must come as a joint account holder with their kids.
The business of withdrawing and depositing money can be done by the parent/guardian and the child. This calls for proper guidance as the child could drain the account as a result of overspending.
- Pay Attention to Fees and Rates
Except you have other plans in mind, you may want to choose a savings account with the lowest fees and highest interest rates. Each bank offers unique fees, features and rates. Pay attention to these details, and choosing the right savings account for your child may not be difficult after all.
- Bank’s Physical Location
It is true that so much has changed in the banking world over the years. Online transactions seem to have won the hearts of customers worldwide.
Even so, the traditional bank hall transactions haven’t phased out; this presents you the opportunity to give your kid the experience of walking into a bank’s physical location and carrying out transactions.
By choosing to do this, you probably have created fond memories for your youngster.
Reasons to Open a Savings Account for your Kid(s)
Although these aren’t the only reasons for parents to open a savings account for their kids, other reasons aren’t farfetched.
- Save Their Allowance
With your kids’ piggy bank close to their beds, they may consider breaking it sooner than expected. But when their savings are stacked safely in their bank accounts, things are more likely to go as planned.
- Lessons About Goals
Does your child wish to own an Xbox game console or a bike? This is the time you can teach them lessons on the beauty of saving to achieve their goals.
It doesn’t matter if the savings objective is to pay for college tuition in the future or to get a fancy pair of Nike’s – what is important should be setting and achieving the set target. As children get older, this acquired skill will continue to pay off.
- Teach them About Financial Literacy
Don’t expect your kids to be financial gurus without giving them a good introduction to how things like bank accounts work.
When your kid has a savings account, she can understand how money gets in and how it goes out. Activities like budgeting, compound interest and savings are some of the lessons your kid can learn.
Through savings to reach a certain financial goal, children can understand the basics of income and expenses. Kids can learn that things have a price; therefore, their financial resources should meet that price.
Disclaimer: This article is entirely the author’s opinion and should be taken as a guide and nothing more.
Here are some banks that offer savings account services for kids in Canada.
1. National Bank Youth Account
If your kids are 17 years and below, and you want to guide them toward independence, this may be what you’ve been looking for.
This savings account can teach them how to start banking online and show them the first steps in managing a budget.
Kids between the ages of 0-6 should have a parent or guardian present at the appointment to open the kid’s savings account.
From 7-12 years, the kid’s legal representative (parent or guardian) is still required. Once permitted by the parents, a child may obtain a debit card.
Children between the ages of 13-17 can open their accounts without a legal representative and get a debit card.
There is no monthly fee or minimum balance until they turn 18 or finish school.
Kids have only 12 free transactions per month via the teller or through Interac e-Transfer. Two of your kid’s free transactions are carried out in-branch only.
This account doesn’t earn any interest.
2. Tangerine Children’s Saving Account
The Tangerine Children’s Savings Account provides unlimited transactions with no monthly fees or minimum balance. It also offers an automatic savings plan.
This savings account can only accept e-Transfers but can’t send them. And all transactions are done online.
To open a Tangerine Children’s Savings Account, the kid’s legal representative should have an existing account at the bank.
3. Scotiabank Getting There Savings Account
Customers under 19 years of age can enjoy the services of the Scotiabank Getting There Savings Account. This savings account provides unlimited self-service and teller transactions.
There are no monthly fees or minimum balance.
This account provides your kids with the opportunity to learn the basics of good money management by saving monthly.
When travelling outside Canada, customers can perform cash withdrawals from ATMs belonging to the Global ATM Alliance member banks.
Using the Interac Direct Payment, customers can perform cheque writing, cash withdrawals, bill payments, fund transfers and Debit purchases.
4. TD Youth Account
This savings account is best for those who are worried about interest rates. There are no monthly fees or minimum balance.
Allowance payments into this savings account have been made easy as parents can set up pre-authorized transfers from their accounts into their kids.
Customers enjoy free unlimited transactions with an automatic savings plan. What’s more? The balance earns interest.
Additional services like overdraft protection will earn you charges.
5. CIBC Advantage for Youth
Within 2 months of opening a CIBC Advantage for Youth, $25 will be deposited into your child’s account.
Your child can access their account from anywhere and at any time with CIBC Online Banking and CIBC Mobile Banking.
This account provides your kids with a competitive interest rate that is calculated daily and paid monthly.
CIBC Advantage for Youth offers unlimited free transactions, including Interac e-Transfers. No monthly fee or minimum balance.
This savings account automatically converts to a CIBC Premium Growth Account once your child turns 18.
6. RBC Leo’s Young Savers Account
The RBC Leo’s Young Savers Account is designed for kids who are under 13 years of age. No monthly fees are charged. Free unlimited Interac e-Transfers available.
The account holder also gets 15 free debits per month. Note that excess debits may incur charges.
Customers can earn a $25 bonus when they open a new account.
7. BMO Plus Plan Youth Chequing Account
This BMO Plus Plan Youth Chequing Account services the needs of kids who are 17 years old and younger. It doesn’t incur any monthly charges.
Customers enjoy 30 transactions per month and Interac e-Transfers. However, customers are required to pay for transactions that exceed 30 per month.
This account offers a premium chequing account for free.
Little or no interest may be earned from this account.
8. Alterna Bank Youth Start Package
This account is for children who are 18 years of age and below. The Youth Start members aren’t allowed Cheque writing access. As expected, there are no monthly charges.
The Alterna Bank Youth Start Package provides 30 free transactions per month, including Interac e-Transfer for customers.
9. Westminster Savings Junior Account
Westminster Savings Junior Account is for kids who are 18 years of age and below.
Kids may enjoy a spending bonus of CAD 10 when they open a new personal Canadian dollar chequing or Plan24 account.
Kids may also enjoy a savings bonus of CAD 10 when they open a high-interest savings account.
Free monthly statements are provided, and customers enjoy two free monthly debits.
Legal representatives must be joint account holders with their children who are 11 years and below. For children who are 12 years and older, parents/guardians must sign an indemnity agreement.
The kids must be able to sign their names on their own to open their desired accounts.