Children may know what banks are and what they do from TV shows, books, movies, video games or taking trips to their parents’ preferred financial institutions during an errand run. But, the idea of saving can be unclear for the youngest generation.
According to Anne Cheh-Falb, vice president and senior relationship manager at CF Bank in Cleveland, and Ric Rotolo, a financial adviser at Middlefield Bank in Beachwood, this is where children’s savings accounts come in handy.
The end goal reasons for setting up a childhood savings account vary from saving for their first house to their college education. Some families just create accounts to teach healthy money habits, Cheh-Falb said.
“The reason that parents should open up savings accounts for their children is to teach them about money management,” she said. “It’s about teaching them those good habits from the start.”
Rotolo said types of childhood savings accounts differ, and sometimes because of what they’re being used for. For example, families can look into establishing a 529 plan, which is “great” for college expenses.
“Others are just basic custodial accounts, which are good to have for future needs like a wedding or a purchase of a house,” he said. “But helping them set it up and get into the habit of saving their money sets them up for a lifetime of financial…