BANKING TIPS: Open bank account for your child

Opening a bank account for your child may be more important than you realize.

According to a recent study from Consumer Financial Protection Bureau (CFPB) of United States, children from low- or-moderate-income families, who have a savings account for college, are three times more likely to go to college, and four times more likely to graduate.

If you look at the cost of school fees nowadays, it’s important to start saving for your child as early as possible.

In today’s world, teaching your child about managing money has never been important but surprisingly most of the kids nowadays have no clue on managing money.

Sadly, money subject is not taught in school so it’s the parent’s primary responsibility to ensure the child is well prepared for financial challenges.

Fortunately, banking has become more convenient than ever, making it possible for parents to open accounts for their children easily.

Many banks here in Tanzania have different type of accounts for kids which is encouraging such as Guaranty Trust Bank (GTBank) Tanzania Limited, newly licensed bank in the country, has a great kid’s account with many benefits called Smart Kids Save(SKS) account.

In most savings accounts, even with small monthly deposits, you still earn interest monthly on the balance which can help turn those small regular deposits into a meaningful balance by the time the child is ready to use the account.

The right age for a bank account and type of the account for your child is mostly up to the parent; In my opinion, the saving account is the best option for a child.

The main goal of saving account is more educational than financial since the savings account encourages them to develop savings habits as they grow up.

Financial skills are very critical to ensure one future economic success and opening an account for a child is the part of teaching your child the financial skills. It is equally important to teach your children the money skills as early as possible as starting the savings accounts for them and by using the bank account, it provides the child a chance of practical knowledge of money management.

As a child grows, you can open other types of accounts such as checking/current account so the child can practical learning about the bank’s fees; the earlier he/she learns about the bank’s fees, the easier to avoid them when he grows up.

This will give the child a place to make mistakes while under your guidance which will equip him/her with the information and experience needed to be financially stable.

There are several benefits of teaching your kids about money management skills such as; they will develop the habit of savings and they will learn the value of money.

Let me conclude by reminding ourselves that most of us (i.e. Tanzanians) are terrible savers so teaching our kids to save through his/her banking account is an invaluable life skill. With uncertain economy times ahead and competitive World we are currently living, without financial management skills is almost impossible to thrive so it is imperative for the kids to start learning about financials and money skills at a very young age.

If kids develop good money management skills from an early age, they are more likely to succeed in their adult life since the financial matters have become more intertwined with every aspect of our lives.

The ability to manage money is a skill that develops over a lifetime so it is never too early to start to begin the process of teaching your children the money’s skills so if you haven’t started yet, start today to teach your kids about money management skills.

Mr Mkwawa is a seasoned banker