Opening a savings account for your children will mean that firstly they get to understand the importance of saving money, but it also teaches them how to handle it too. Many High Street providers offer children’s savings accounts which have easy access with passbooks. Younger children may not be allowed to open an account for themselves, but a parent is able to do this on their behalf but this does depend on which accounts they are as well as which provider you choose to open the account with.
The fact that many of these savings accounts have instant access passbooks means a parent is able to help their children understand just how their savings accounts work. These are valuable lessons a child needs to learn and the earlier they do so the better. This type of account may not attract the best interest rates but many parents believe the learning factor is just as important as the money they might be able to make on the funds they save in the accounts. This is a crucial way of teaching a child to handle money and the more a parent helps guide their children through these stages, the easier it will be for the child to manage their own finances later on in life.
Children’s Savings Accounts that Have to Managed by Parents
There are certain children’s savings accounts which have to be managed by their parents. These are the more rigid accounts that may be higher and most do not have access to any funds in them. It goes without saying these accounts are set up by parents in order to secure a lump sum of cash at the end of the agreed term. There are many choices to choose from when thinking about setting up this type of savings account for a child. However, many financial advisers believe that a mixed savings portfolio is the best as it means a parent is spreading the risks.
Are the Risks Worth the Rewards?
Share savings accounts and others of a similar nature, usually means the funds in the accounts are invested in stocks and shares. As such any savings may fluctuate according to how the market is acting. It may also affect the amount that is actually invested. This type of investment has to be seen as a long-term one as it is believed that this greatly reduces the risks involved. Deciding exactly which type of savings account is the right one for you, is a difficult choice to undertake and some parents feel that expert advice is needed in order to get it right. However, seeking this advice can initially be a costly business, the thing you have to remember is that by seeking expert financial advice may pay dividends in the long run.
The truth is that no one really knows how the financial markets will react to situations in the future. This is why managing a child’s savings account has to be taken seriously and especially if you are considering the higher risk options available to you.