Here's the Right Age for Your Child to Open a Bank Account
KEY POINTS
- All children progress at a different rate.
- Age 9 is considered a good age to open a savings account.
- A child cannot open a bank account independently until age 18, so opening a custodial account in both of your names is the perfect workaround.
From the moment they are born, our children learn from us. They learn some lessons by watching, like how to be kind to animals and polite to people. Other lessons are better learned hands-on, like how to make cupcakes or manage a bank account. But how do you know the right time to teach a child to manage a bank account? Here, we take a look.
The tricky bit
Kids develop at different rates. The child who learns to read in kindergarten may not read better than their peers in third grade because everyone else caught up. The kid who can't seem to kick a ball in third grade may end up being the best soccer player on the team by seventh grade. Physical, intellectual, and emotional development works like that. It's messy but fascinating.
Still, financial experts suggest that most kids are ready to learn money concepts by age 9, which makes age 9 the ideal time to open a savings account (a checking account will come later when your child is ready for greater financial responsibility).
What a child learns by opening a savings account
Many adults could be better about putting money into savings. Even if they can afford it, spending is more fun than savings for most of us. Helping your child open a savings account can teach them the following:
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- The pleasure that can be found in saving for things they want.
- The way compound interest makes their money grow.
- How to set savings goals and stick with them.
The power of making money fun
According to the U.S. Department of State's Teachers Corner, using activities that make learning a new skill engaging and fun inspires a child to participate in what you're teaching. Plus, having fun while learning also helps children retain what they're learning better, because the entire process is enjoyable and memorable.
Anything you do, like stopping by for ice cream after each trip to the bank, will become associated with the experience. And how you approach the subject of money will also become part of the experience. If you preach at them about money like a 1920s tent evangelist, you're going to strip the experience of joy. But if you let them know how excited you are for them and find ways to discuss money casually, that's the vibe they're going to pick up.
But what about checking?
Somewhere around the age of 15, "some" kids are ready to open a checking account. Notice the emphasis on the word some. As mentioned, children develop in spurts, and while one 15-year-old may be ready to conquer the financial world, another may be too stressed out or busy to bother balancing a checkbook. That's okay. Just keep an eye on your child, and sometime before they leave home to go to college or start their young adult lives, slowly introduce them to the way checking accounts work.
Better they make mistakes while living under your roof, with you there to gently guide them, than to make their first banking mistakes when they're out on their own.
How to set up a kid's account
Despite how grown up your 16-year-old may think they are, children cannot open bank accounts on their own until they're 18. However, as the child's parent, grandparent, or legal guardian, you can make it work by opening a custodial account at a bank, credit union, or other financial institution.
A custodial account has both your names on it and allows you to have joint ownership. That means your child has the opportunity to use the account while you monitor account activity. Each of you can make deposits and withdrawals.
Here's what you'll need to open an account:
- A valid picture ID with a current address
- Your Social Security number
- Your child's name, birth date, and Social Security number
- Personal information, such as your phone number and email address
Not all banks are created equal
You'll find that some banks are better than others regarding custodial accounts. Here's what you're looking for in the right bank:
- No monthly maintenance fees
- A high annual percentage yield so your child can watch their money grow
- A low minimum required to open an account
- No or low minimum balance requirements
- Free online banking
Our job as parents is to do everything within our power to prepare our children for life outside the nest. While teaching them to manage a bank account won't make them 100% ready for the real world, it is a good start.
Our Research Expert
Dana is a full-time personal finance writer, with more than two decades of experience. Her focus is on helping readers feel less alone as they navigate their personal finances and offering actionable insights.
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