Children’s saving accounts – which is best for your kid?
Sure you know the Dollarmites savings account that Commonwealth Bank offers to primary school kids but did you know there are other children’s savings accounts from other banks?
There are 46 children’s savings accounts listed on InfoChoice from banks and credit unions in Australia.
The world of banking has changed considerably since we popped $2 notes (yes, notes) into envelopes before recess to be deposited into our accounts.
We now have digital access to funds, multiple savings account options and the ability to pay using multiple platforms and devices.
It is entirely possible for a youth today to save and spend without ever having to visit a branch.
So, in the modern world, what are the best savings account options available for children?
Recommendations for a savings account for children
The Federal Government’s Australian Securities and Investments Commission’s (ASIC) MoneySmart division has a detailed guide on how to teach kids about money available online.
ASIC’s MoneySmart senior executive Laura Higgins said the key was to find savings accounts designed for kids that reward them for making regular deposits.
“Before you open an account make sure you compare the features, including any account-keeping fees,” she said.
There are many youth savings account options available, including the revamped CBA Dollarmites account. ANZ offers a Progress Saver account for kids, Westpac has the Bump Savings account while NAB has a dedicated online page designed to educate parents and children on the value of savings.
Most smaller lenders offer children’s savings products as well.
What are the tricks and traps to look out for?
Did you know that children’s bank accounts might need to pay tax? This is one of the little things’ parents should look into before opening a child’s savings account, Laura said.
“Look for a basic account that offers no account-keeping fees and no minimum deposit amounts,” she said.
“Make sure you check with the ATO if any interest earned in your kid’s account will be taxed.”
Should the child's account be linked to a parents account?
This is a key question many parents have, should the child have full autonomy or should the account be linked to a parents account so they can monitor how things are going?
Laura said this depends on the child’s age, with only older children able to have their account in their name only.
“The options available will differ depending on the age of the kid,” she said.
“For kids under 12 years a parent (or guardian) will need to be an authorised signatory or open the account in trust.
“For kids aged 12 years and older, the account can be opened in their name or as a joint account with a parent or guardian.”
What other savings advice would you offer to parents for their children?
There are many things you can do to start your child’s savings journey and teach them the value of money.
Starting with a piggy bank before a savings account is a great stepping stone towards the world of savings and banking.
Pocket money is also a great way to teach children the value of earning and saving money.
Laura said opening a savings account is a great opportunity to speak with your kids about the basics of managing money.
“Depending upon the age of your kid, you can start by explaining the difference between needs and wants,” she said.
Then have a discussion about budgeting, to help your kids understand the value of saving versus spending.
“Visit moneysmart.gov.au for more information on teaching your kids about money.”
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. If you or someone you know is in financial stress, contact the National Debt Helpline on 1800 007 007.