One of the greatest gifts a grandparent can give is the ability to manage and budget money, and perhaps the best way of doing this is to open a savings account for a grandchild. Learning how to utilise money they receive as gifts and allowances will help a grandchild realise the advantages of saving while also teaching them the true value of a dollar, skills that will serve them their entire life.
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Inquire at your bank or credit union for details on accounts available for minors. Many institutions offer special incentives for children because they see them as their next generation of investors. You will also need to learn the minimum amount required to open an account for a minor.
Prepare the information you'll need to open an account. You will have to give your grandchild's full name, date of birth, Social Security number, full address and phone number, as well as the same information for yourself or another designated adult who will be on the account.
Count your grandchild's money with him while you explain how a savings account works and decide on the amount he's going to deposit. This will give your grandchild a feeling of empowerment over his own money, and make him feel important and a part of the process.
Visit the bank with your grandchild in tow when you open the savings account. Have her be the one to explain the reason for the visit; this can be practised in the car on the way there. Ask the bank officer to explain the terms and interest rates to your grandchild, and have your grandchild sign the forms (you will be required to sign also). Have the bank statements sent to your grandchild's home address.
Allow your grandchild to fill out the deposit slip, guiding him as to the required information. Let him count the money and hand the cash and deposit slip to the teller, completing the deposit and receiving the receipt.
Stop at a store after you leave the bank and purchase an accordion folder for your grandchild to keep her receipts and bank statements in, showing her how to organise the paperwork. This will give her a head start in years to come when she has to deal with those pesky tax records.
Make regular visits to the bank with your grandchild, allowing him to fill out the deposit slip and talk to the teller so he gets in the habit of saving.
Tips and warnings
- If your grandchild is too young to understand the process, take her with you anyway. They will absorb the atmosphere and get used to banking before they can read or write!
- Allow your grandchild to decide the amount that she saves. A good way to do this is to use three jars at home, labelling the jars "Spending" "Saving" and "Giving." Your grandchild can put a percentage of her money in each jar until she reaches the goal amount needed for a special purchase, bank deposit or donation.
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