How to Save Money and Have Fun with a Youth Savings Account

 No one is ever too young to learn about money and its management. A parent can teach their kid about money by opening a youth savings account with any of the leading banks. By opening a Youth savings account, children will learn about various aspects of finance like risk management, investing the power of computing, and also skills like management and how to spend wisely.

Before opening a savings account for the child, parents should check all the features like the rate of interest, the offers the bank is giving out, and other support qualities. There are 2 types of a youth savings accounts –

●      Savings Account – In this type of account, the kid and the parent both have joint custody over the account, and parents can monitor the transaction at all times. Once the kid turns 18, they can then change this custody or joint venture to a single event.

●      Custodial Account – In this type of account, the money that is being deposited into the youth savings account cannot be withdrawn by the child until and unless they are of legal age, i.e., 18 years. Interest would be given on the amount till then as per the terms and conditions of the banks.

Below are some of the tips on how to save money and have fun with a Youth Savings Account:

●      Make a good example – It is no doubt that kids take up all the habits from their parents. If you want to teach your kids about savings, then first and foremost, the parents should save the money and show the kids how it is done. Rather than spending lavishly on hotels and stuff, parents should encourage kids to cook their own meals as this could be a huge money saver as they move forward.

●      Identify the goals from needs – Often, kids want whatever they see first, be it a toy or food. Parents should identify the goals of the kids and then work on achieving them along with the financial aspects. This will also help the kids plan for the long term, and they can differentiate between needs and wants. In a survey conducted by the UK, it has been found that kids who understand what their needs are and how to achieve them are doing well in financial aspects.

●      Do not invest a lump sum amount – Many times, after opening a youth savings account. Parents invest a lump sum amount either for some interest purpose or one-time investment. However, this won't teach the kids the true meaning of financial management. Kids should be left to earn their own money, and then that money should be deposited every month into the account. This will make the kids understand the importance of money and how the deposit and withdrawals are made. Many banks also provide cheques and deposit receipts that the kids need to fill themselves, thereby training them for the future.

●      Keep a constant check on withdrawal – Once the kids see that they have enough money in their accounts, they might start using it for unwanted things. Parents can have a hold on this by making a withdrawal limit and overseeing all the transactions. Kids should be taught that money should only be used for their needs and not for all their wants.

●      The power of investing – It has been seen that once the kids have a goal, they start working towards it and start saving. However, what they don't see is once they have enough in the bank, they withdraw it all for the need (product) and are left with again zero balance. This demotivates many kids as they have to start all over again. Investing is a powerful concept here. Many of the banks have a special session wherein they teach small investing to kids and are asked to invest 10 – 20% of their money, and in a few years, the kids start seeing the difference. This trains them very well for adult life as they will be well versed with this concept, manage money more effectively, and make money work for itself.

●      Let them be their own boss – Kids should be given a bit of liberty with money, and parents should not interfere in all the small transactions. Kids should be allowed to make some mistakes as this is the only way they would learn everything. Many banks also provide an option for lending money but state that this will require monthly interest upon repayment. This makes the kids think if a particular product is needed, and they start thinking about it from a financial perspective.

Documents are needed for opening a youth savings account

Opening a Youth Savings Account in Kuwait is quite easy, and the following are the documents needed – ID proof, photographs, parents' identity proof and birth certificate.

It has been established that opening a youth savings account has good potential for the kids to learn about the financial aspects and helps them with other smaller aspects of life. Parents should also note that a youth savings account doesn`t provide a high-interest rate compared to a regular savings account, and this cannot be considered an adult investment. This is only for kids' education and how they can be made ready to take on adult life.