Is a Child (Custodial) Savings Account a Good Choice?

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Is a Child (Custodial) Savings Account a Good Choice?

By ric dalberri

As parents we are until the end of time watching out for the welfare of our children. We manage to make sure they have enough to eat, clean clothes to wear, and a good education. One area that we seem to overlook is their financial education. If we build a foundation when they’re young, it will stay with them.

Thing of the powerful tool of teaching them about money & savings. If you start early, they can have thousands as they reach college. It doesn’t need to have a large amount to open and only needs a few transactions per year to keep active. Remember, you are the custodian for the account. Once you put the money into the account, by law it really belongs to your child.

An additional benefit of opening an account for your children is that you are instructing them to have sound financial habits from a very early age. Many children don’t get a lot of financial education at school or at home. This puts them at stake when they go off to college and the credit card companies are there just waiting to sign them up for a credit card. That is the initial step to financial disaster for many young people. If they are not taught at a young age to handle money, they will get in debt quickly.

Encourage your children to come to the bank with you. Teach them how to fill out a deposit slip. Let them hand it to the teller. Go over what the receipt means. If they get cash gifts or earn an allowance for chores, let them count it out, fill out their own slip and go with you to the bank and do it all.

Warning! Starting our teaching your children at a young age is great. However, we don’t want to have them think ‘you have to do without’. You must teach them balance and if some need unexpectedly arises they have to deal with it.

Be sure we keep their saving habits in balance. They must be able to spend their money occasionally too. This is one of the ways they will achieve what you want them to. That is to be an educated shopper. Money is good and a reward and a needed commodity.

Assisting your children achieve financial training at an early age will help them in making sound decisions in the future.

Always remember, this is a custodial account, meaning, you are the custodian for their money even if you give it to them. If you take it out, you may have to answer legally as to what you did with the funds.