Have kids? It’s never too early to think about how you can give them a head start financially. Opening their first checking account is a great way to put them on the right financial path. Here’s what you’ll need to bring with you to the bank, along with ideas on how you can start funding the account.
The Documents You’ll Need
Before you head to the bank, make sure you gather the paperwork you’ll need to open an account in your child’s name. “Bring your child’s birth certificate and both their Social Security number and yours,” says David Niggel, president of Key Wealth Partners. “Most banks require a parent to be listed on the account, so you need your own government-issued ID, too.”
Niggel points out that most banks will require you to make an initial deposit. Bring funds with you or be prepared to transfer funds from another account if you have one with the same institution.
And, as much as you want to give your child a head start toward financial success, you can only open an account for a living individual. That means you need to wait until your baby’s born to open a checking or savings account in their name.
Smart Ways to Fund Your Child’s First Checking Account
Niggel says you can encourage grandparents to make small deposits to your child’s first checking account instead of buying them material items. “Even though the stuffed animal is cute, $25 placed into a savings account can grow over time into a significant amount that can eventually help with college or other expenses,” he explains.
For older children, take advantage of opportunities to show them how to make smart financial decisions. “When your child is old enough, set up a few piggy banks,” suggests Mark Struthers, CFP and founder of Sona Financial. “Designate one each for college, both short- and long-term savings, and fun stuff.”
When your kids receive money from gifts or an allowance, help them divide the funds across each piggy bank. Then periodically deposit the cash earmarked for savings into an account at the bank. This is what Struthers and his wife do for their kids.
“We even match a certain amount of long-term savings to encourage them to put money in the bank,” he explains. “We also show them the interest and how they get a little extra for savings — they love seeing that!”
Go Beyond Bank Accounts
Remember that you can take other steps to save for your children’s futures, beyond just a first checking account. “Parents can set up a regular mutual fund or brokerage account in [their] child’s name,” says Pam Horace, financial planner and founder of Pathfinder Financial Planning. “You can also establish a 529 plan if your goal in opening an account is to help your kids save for college.”
A bank account is a great start for your children, but be sure to explore other options based on your savings goals. A specific savings account for college may make more sense, and an investment account is a great option if you want to get a jump on long-term wealth-building for your kids. Just make sure you go to the bank prepared and informed—ideally, with a nice chunk of gift money! Then, when your kids are old enough to grasp the concept of saving, they’ll have a good head start.