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How to Teach Your Kids about Money with a Children’s Bank Account


Teach Your Kids about MoneyWritten by Chelsea Cook

There are certain life lessons that all parents should teach their children and telling them how to go about managing money is certainly one of them. Getting them set up with their own bank account and getting them into the habit of using it to budget, save and spend what money they have wisely, is going to help set them on the right track when they are adults.

Budgeting

Any parent that runs a UK current account and has to manage the monthly finances will be fully aware of the importance of budgeting. Even at a relatively young age, children start to receive money either from a monthly allowance or fairly regular payments for chores completed as well as money given to them as a gift especially on their birthday. It is never too early to get them into the habit of making a spending and saving plan, which actually sounds better to a kid when compared to terms like budgeting.

Creating habits and responsibility

The main life lesson you are imparting to your children is the power and importance of money and taking responsibility for the way you handle it. By giving the child the chance to make their own spending and saving decisions as much as possible, they are instinctively developing good habits and a sense of responsibility that they can hopefully carry on into their adult life, when the sums of money get bigger.

Spending

For a child, spending is of course much more fun than saving, so as a parent, you have to provide some guidelines that they can understand and work to themselves, such as saying that they should put away at least 25 per cent of every amount, which means that they can work out how much they can afford to spend of their money. It is always best to give them the freedom and the opportunity to put that way, they may well be more careful next time they get some more funds.

Saving

It is vital that you explain the importance of saving to a child and when they are very young, the best way to do this is to help them set a savings target for an item or activity they really want. Saving is generally a far more boring concept than spending, as a far as most children are concerned, so the habits that are going to help them in later life just have to be sold in the best possible light to them, using goals or terms that are personal to them, such as how long it will take them to save enough for a new games console.

Opening a bank account

All of these lessons and habits are far easier to achieve when the child has their own bank account that they can access. Many of the savings accounts on offer have some sort of child orientated gift or reward scheme attached to them, but it is more important to get an account that helps them to get access to their money if they want to, perhaps by having a cash card, which most kids particularly like, as it makes them feel more adult about saving.

Letting children who are old enough run their own bank account and work out savings goals and spending limits, is a great way of teaching them some valuable financial lessons that will help them to avoid mistakes in their adult life.

How to Teach Your Kids about Money with a Children’s Bank Account

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Different types of bank account


Different types of bank account

 

Different types of bank account

Different types of bank account

When it comes to opening a bank account, you’ll have a decision to make – which type of bank account should you open?

Well, to make that decision a little easier, we’ll have a quick run through some of the most common types of bank account available on the market today:

Current accounts

Current accounts are probably one of the most common/popular types of bank account on the market today. They are often seen as the ‘norm’ when it comes to banking.

With a current account, you can have your wages paid in, you can make payments using a card, pay for things using a cheque, enter an overdraft… and much more.

Most people use current accounts to manage their day-to-day finances.

Savings accounts

Savings accounts are, as you may be able to tell, bank accounts you can use for saving money.

You may be wondering why you can’t just use your current account to do this – and, although you could do, current accounts don’t usually provide you with as much interest on the money you pay in.

Savings accounts, on the other hand, can pay a fair bit more interest on the money you pay into the account. The level of interest you receive on your balance will depend on the terms of your account.

Bear in mind: the interest you receive may change if you make a withdrawal from your savings account before a certain time. Again, this depends on the terms and conditions of the account – so make sure you check these before applying!

Basic bank accounts

Basic bank accounts (otherwise known as bank accounts for bad credit) are primarily for people with poor credit histories. So, if your credit score isn’t as good as it could be, a basic bank account or an alternative account may be right for you.

In simple terms, it’s like a current account, but with ‘more basic’ features – i.e. you probably won’t get a cheque book, or be allowed to enter an overdraft… but you should still be able to make payments via Direct Debit and have your wages paid in.

Different types of bank account

Posted in BankingComments Off on Different types of bank account


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