A Child Savings Account For Your Kid is a Terrific Start to Financial Discipline
By Acceler8now.com Investment Education Team
October, 2007
Financial discipline is one key plant of financial success. If you imbibe and internalise it, you are halfway through in building your financial fortress. Getting your children to grow in such discipline is one important way to prepare them for a successful future. Often, it's not exactly what people earn in life that defines their eventual financial standing. It's more of how they control and manage those resources that shapes what they become, financially. Getting your children on the right pedestal should therefore be a consuming passion, because you love them, don't you? Well, one way you can get going, early in their lives, is by teaching them through a bank saving process. Besides, starting early with a savings account for your child helps to accumulate resources, even before you realise it.
What a Child Savings Account is
A child savings account is an account opened for a child in his or her name, preferably at birth and initially operated by the parent until the permitted age for self-operation. One purpose is to provide for various expected needs of the child, but beyond that, such account is a major influence is shaping future financial perspective for the child. Here are benefits you will derive from opening an account early for each of your children:
Capture All Inflows From Onset
It's our culture to show joy and support when a child is borne and much of this translates to gifts of money from friends, relatives, colleagues, etc, when a child is borne. Yes, you'd prefer to use those inflows to meet immediate pressing problems. But is that really the most prudent decision? After all, the most pressing need is the well-being and future development of this child. A early savings account helps you get all the money out of reach and possibly locked up for his/her benefit.
Earn Returns for Growth
A savings account is an interest-bearing account and runs on compound interest basis. That's great for a child when started early, because you not only sterilize this money from easy misapplication but you also give it room to enjoy compounding and grow. Over time, that growth could build a sizeable fund that can help shape the child's progress.
Regular Incremental Savings
It's natural that if you create an account for your child and place some money in it, you will derive some excitement as you see the money grow. That is a good incentive for more additions to the account. Besides, a disciplined parent can commit to regular incremental additions to the account. And each time gifts are made to the child, they are quickly rushed into the account. Before you know it, you could be up with a growing fund that can help meet the child's educational and other needs. That is, irrespective of the parent's financial standing.
Give a Powerful Head-start
Understanding money is a strong foundation for life, but it doesn't just come easy and not everybody gets it. Learning to save through a bank is one early exposure that can easily shape a child into financial prudence and success. When you begin an early account for your child, he not only grows to know about it, but can also see how it has grown over time. He could begin to also personally deposit any money that comes his way. A good financial manager is already being moulded. Not works more in building financial success that an early perspective and early commencement.
Enjoy Funding Flexibility
Above all, you can build up a reserve for each child's up-bringing in a fairly painless manner by spreading it over a wider period of consistent saving. Simply task yourself, according to available resources, to put a minimum sum into each child's account every month and gradually provide for their education and other needs. If the amount in the account gets sizeable, it will also be possible to spread some into other investment assets like stocks. Chances are high that you are able to meet the child's needs and have something to hand over as he/she is ushered into adulthood.
So, that's one tool you can use. Financial success is not so much about having limitless money as it is about prudent and wise use of what you have. It's also very much about being able to order your finances in such a way that you meet your defined financial needs, irrespective of your income status. A child savings account provides a planned basis for funding a child's education and development. Give it a try and see if it doesn't pay off.
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