Author Topic: Teaching Children About Account Management  (Read 113 times)

Offline cooljoe

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Teaching Children About Account Management
« on: September 05, 2016, 09:50:47 AM »
Kids may not have part-time jobs but they have allowances or cash gifts. An online report by https://www.bankofamerica.com offers the following tips on how children can manage their accounts.

Set up a savings account: Parents should open a savings account with their child to teach them about money management skills.

Children can always spend some of their money, but help them learn that it is important to always save some. Even a little savings a month can have big impact over time and help create a habit that serves them later.

Save for a goal: Help your children set goals for savings?say, buying an expensive video game console or a pair of shoes?to increase motivation. Telling your children about a savings goal you had?a new TV for the family, for example, can help them better understand how they can benefit themselves. Then, explain that they can use the money in their savings for those items. And remind your preteens that the money in the savings account is not for day-to-day purchases. Discuss the value of money with children and how it grows over time.


 
Discuss the power of compound interest: You don?t need sophisticated financial knowledge to teach your children that their savings will earn interest?and those earnings in turn generate more interest. You can use an online calculator to demonstrate how compound interest works on even a small amount of savings.

Reviewing account activities: Parents should consider scheduling regular times to sit down with their preteens and review their account balances and activities together. This helps create a habit of paying attention to their accounts and seeing how close they are getting to their goals or remind them to continue saving versus spending.

Discuss wants versus needs. Children often need help to understand the difference between necessary and discretionary purchases. Encourage them to determine whether they truly need something, and explain how forgoing small purchases, such as pizza or music downloads, can help your child save up for more important purchases.

Managing multiple accounts

In this era of digital world, savings accounts with different banks make sense, but it is not without its disadvantages.

According to http://www.mydigitalfc.com, having multiple bank account has its advantages such as cash withdrawal at the ATMs. Banks are limiting the ATM withdrawals in a day. So, having at least two bank account doubles cash withdrawal options. It also helps when a particular bank?s ATMs run out of cash.

Even in online transactions, having multiple bank accounts helps, especially when there is an operational issue linked to a payment gateway or internet connectivity.

The functioning in public sector may get disrupted due to a strike called by a bank employees union, for instance. At this time, having another account in a private bank is like a boon. Having accounts in banks has its own share of advantages but having a private bank account ensures diversification. ?One should stick to a large private bank,? says Gaurav Mashruwala, founder of the financial advisory firm, A Cutting Edge.

Multiple savings accounts are also a savvy way to play the higher yield game because you can shift money from lower yielding bank account into higher yielding bank accounts. Moreover, some banks are still not asking for minimum balance and allow zero balance.

Some banks offer personal accident death cover as well as medical insurance cover at very attractive annual premium to their account holders. As experts say it is best left to an individual to weigh the advantages and disadvantages.

Multiple bank accounts also help in issuing pay orders when you suddenly find that there are not enough cheque leaves remaining in your cheque book. You will need some working days to get new ones.

Banks offer credit cards to their account holders and they are either linked to salary or fixed deposits. With multiple bank accounts, one has more choice in selecting credit cards.

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Teaching Children About Account Management
« on: September 05, 2016, 09:50:47 AM »

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