Savings account options for kids under 18
Short answer
A savings account for kids under 18 is a safe, easy way for children to learn how to save and manage money while earning interest. Parents or guardians usually open these accounts as joint owners with the child. Starting early helps kids build good money habits, understand the value of saving, and prepare for financial independence as adults.
Why Do Kids Need a Savings Account and When Do They Understand It?
Teaching kids about savings accounts is a key life skill that helps them manage money wisely throughout life. Children as young as 5 start noticing coins and money, but around ages 8 to 12, they begin to understand bigger ideas like saving for a goal or waiting to buy something special. At this stage, kids understand that money saved today can help them get something better later.
A savings account introduces a real-world way to keep money safe, away from being spent quickly, and to watch it grow over time through interest. For example, if your child saves $10 in a bank account with interest, the bank pays a little extra for keeping the money there. This teaches patience and shows how saving can be rewarding.
Parents and teachers can explain this by saying: “Imagine your money is like seeds. If you keep planting seeds and watering them (saving regularly), they will grow into a money tree.” This kind of metaphor helps kids grasp the idea of growing savings.
Starting savings early also builds confidence. When kids see their money grow, they feel proud and more interested in managing money responsibly. This prepares them for handling bigger financial decisions as teenagers and adults.
How Can Parents Teach Kids About Savings Accounts Age by Age?
Kids develop understanding about money differently at every age. Here’s an age-by-age guide to help parents and teachers introduce savings accounts and money management to children under 18:
| Age | What Kids Understand | How to Teach About Savings Account |
|---|---|---|
| 5-7 years | Basic coins, money as a trade tool | Use piggy banks to save coins; explain banks as safe places for money |
| 8-10 years | Saving for goals, delayed gratification | Talk about saving for a toy/game and how banks keep money safe and pay interest |
| 11-12 years | Handling small amounts, simple math | Open a joint bank account; show bank statements; teach how interest adds money |
| 13-15 years | Managing money, setting bigger goals | Explain deposits/withdrawals; use online banking tools with supervision |
| 16-17 years | More independence in money management | Introduce teen savings accounts and debit cards; discuss budgeting and responsible spending |
Practical Steps for Each Age Group
- Ages 5-7: Let kids drop coins into a clear jar or piggy bank labeled with a goal, like “New Bike Fund.” Explain that banks do the same but keep money safer.
- Ages 8-10: Help kids open a savings account with you. Show them how to make deposits and check their balance online or by paper statement.
- Ages 11-12: Encourage kids to track their savings growth and calculate simple interest to see how money grows.
- Ages 13-15: Let teens make small transactions with parental guidance. Use apps that show spending and saving categories.
- Ages 16-17: Talk about transitioning to more control with a teen account, budgeting for expenses like clothes or school supplies, and saving for college or a car.
Taking it step-by-step helps kids feel confident and keeps money lessons appropriate to their understanding.
What Is a Savings Account Under 18 and Who Can Open It?
A savings account under 18, often called a “minor” or “custodial” account, is designed to help kids save money safely with adult supervision. In the U.S., banks typically require a parent or guardian to open the account jointly with the child. This means both the adult and child have access, but the adult helps manage it until the child comes of age.
For example, if your 10-year-old wants a savings account, you will open it with the bank naming yourself as the custodian. The money legally belongs to the child, but the adult oversees the account until the child turns 18 or 21, depending on state laws.
Some banks offer special teen savings accounts for children 16 or older, which may allow more independence but still require a parent’s permission.
If a child tries to open a savings account alone before 18, most banks won’t allow it because of legal rules protecting minors. However, certain credit unions or community banks may have exceptions or programs designed for minors with fewer restrictions.
Parents should compare banks to find the best account with no fees, good interest rates, and helpful features for kids. Sites with lists of high interest savings accounts for those under 18 can help find good options.
What Could a Parent Say to Explain Savings Accounts to Their Child?
Talking about money should be simple and encouraging. Here’s a sample script a parent or teacher can use to start the savings conversation with a child:
“Saving money means putting some of what you get away for later, like a special toy or game. We can open a savings account at the bank where your money stays safe, and the bank even gives you a little extra money for saving it. You’ll be able to watch your money grow over time!”
This wording helps kids understand saving is both safe and rewarding. It also sets the stage for regular saving habits.
You might add: “Every time you get money, like from chores or gifts, try putting some in your savings account. You won’t lose it, and it will help you buy bigger things later!”
Using encouraging phrases helps children feel involved and motivated.
How Can Parents Use Everyday Moments to Practice Saving?
Saving doesn’t have to be complicated or only happen at the bank. Everyday moments offer excellent chances to teach saving skills:
- Allowance Time: When your child receives an allowance, help them divide money into three parts: spend, save, and share. For example, if your child gets $10, suggest putting $3 in savings.
- Gift Money: Encourage kids to save at least part of birthday or holiday money. For example, save half of a $20 gift and spend the rest on something small.
- Shopping Trips: Before buying, ask your child to count their savings to see if they have enough. This encourages goal-setting and self-control.
- Bank Visits: Take your child to the bank to make deposits and watch money grow in their account. This makes saving real.
- Goal Setting: Help kids set specific savings goals, like a bike or a game, and track progress together. Celebrate milestones to keep motivation high.
Example of Tracking Savings
Create a simple chart with your child:
| Goal | Amount Needed | Amount Saved | Amount Left to Save |
|---|---|---|---|
| New Game | $40 | $15 | $25 |
| Bike Fund | $100 | $30 | $70 |
Review this chart weekly or monthly to keep your child engaged.
Practicing saving in daily life builds habits naturally and makes money management less abstract.
What Common Mistakes Do Parents Make When Teaching Savings?
Even well-intentioned parents sometimes miss the mark when teaching kids about savings accounts. Here are some common mistakes and how to avoid them:
- Not Involving the Child: Opening an account but not showing or explaining it makes saving invisible and boring. Instead, involve your child in deposits, withdrawals, and checking balances.
- Making Saving a Chore: If saving feels like a punishment or obligation, kids resist. Make it fun by setting rewards and celebrating success.
- Skipping the “Why”: Kids need to understand why saving matters. Explain that saving helps them buy things they want without stress or borrowing.
- Overloading with Details: Introducing bank jargon or complex rules too early can confuse children. Use simple language and age-appropriate explanations.
- Ignoring Milestones: Celebrate when your child reaches a savings goal or learns a new money skill. Praise builds confidence and encourages continued effort.
By avoiding these mistakes, parents help children develop positive, lifelong money habits.
When Should Parents Seek Extra Help About Savings Accounts?
Sometimes parents or kids need extra support to understand or manage savings accounts. Consider these situations for seeking help:
- Bank Questions: If you don’t know which account is best or how fees and interest work, ask a bank representative for a clear explanation or a parent-friendly guide.
- Special Needs: Children with learning or developmental challenges may benefit from simplified money teaching tools or professional advice.
- Teens Approaching 18: The transition from a minor account to an adult account can be confusing. Review bank policies and prepare your teen to manage money independently.
- Financial Education Resources: Look for community workshops, school programs, or online courses tailored to kids and families.
- Troubleshooting Issues: If your child loses a debit card or has questions about account activity, contact the bank immediately for help.
Providers like your bank, credit unions, or nonprofit financial counselors can offer guidance. Early help ensures money habits stay on track and children feel empowered.
Frequently asked questions
Can kids under 18 open a savings account without a parent?
Generally, kids under 18 cannot open a savings account alone because laws require a parent or guardian to co-own or oversee the account. Some credit unions or community banks have programs for minors with fewer restrictions, but parental involvement is common and helpful.
How much money should kids save in their accounts?
The amount depends on a child’s income and goals. Encourage saving a small portion regularly—for example, 20-30% of allowance or gift money. The habit of saving consistently is more important than the amount.
What is interest on a savings account?
Interest is extra money the bank pays you for keeping your savings there. It’s a small percentage added over time, helping your money grow without extra work. This teaches kids the benefit of saving.
When do kids get full control of their savings accounts?
Usually at age 18, or sometimes 21 depending on state laws, the account changes to full ownership by the child. Then they can manage the account independently without a parent’s permission.
Are there savings accounts that pay more interest for kids?
Yes, some banks offer high-interest or high-yield savings accounts specifically for minors. These accounts help savings grow faster. Parents can compare options using resources like [high interest savings accounts for those under 18](#r1).
How can I teach my child to save without a bank account?
Start with physical methods like clear jars or piggy banks labeled for different goals. This helps kids see and count their savings, building money skills before opening a real account.