As a parent, you want to make sure your child is set up for a strong financial future. One way to begin is by opening a savings account for them.
From teaching them financial basics to building up funds that will continue to grow over time, there are plenty of reasons to get started. Below, we answer some common questions about opening a savings account for your child.
Frequently Asked Questions About Opening a Custodial Account
What are the benefits of opening a savings account for my child?
Opening a savings account for your child is about more than setting money aside. It’s a simple way to introduce healthy money habits early and help them understand the value of saving for something meaningful.
A child’s savings account can be a safe place for birthday money, holiday gifts, allowance or money from small jobs as they get older. It also gives parents, grandparents and guardians a natural way to talk about spending, saving, giving and planning ahead.
The biggest benefit may be the habit it helps build. When children can see their money grow over time, saving becomes more real to them. The CFPB encourages parents to use savings accounts to help children learn about protecting money, earning interest and planning for the future.
A savings account can help your child:
- Learn how to set financial goals
- Understand the difference between saving and spending
- Keep money in a secure place
- Build confidence with basic banking
- Prepare for future needs, purchases or opportunities
What is the best age to open a savings account for a child?
Some parents open an account when their child is very young, using it as a place to save gifts from birthdays, holidays or family members. Others wait until their child is old enough to understand the idea of saving toward a goal, like a toy, trip or future expense.
Younger children may not fully understand how the account works yet, and that’s okay. The account can still serve as a helpful starting point. As they get older, you can begin involving them more by showing them their balance, helping them make deposits or talking through how saving small amounts over time can add up.
“One of the best things about starting early is that it takes the pressure off. A child doesn’t need to understand every part of banking right away. The account can simply be there, growing with them, until they’re ready to take a more active role,” says Jennifer Copley, Vice President of Customer Experience and Marketing.
What type of account is best?
When comparing accounts, look at factors such as minimum opening deposit, monthly fees, interest rates, online or mobile access and whether the account allows a parent or guardian to monitor activity.
At Fidelity Federal, our Statement Savings Account is the perfect way to set up a savings account for your child aged 18 and under. For older students preparing to graduate from high school, our FidFed Student Account offers the same great benefits of a FidFed checking account, geared for young adults (available for ages 14+; requires an adult 18+ to open).
What about 529 plans?
A 529 plan can be a helpful option if your main goal is saving for education. However, it’s different from a regular savings account.
A traditional savings account is flexible, while a 529 plan is designed specifically for qualified education expenses. For many families, it may not be an either/or decision. A child’s savings account can be used for everyday learning and flexible savings goals, while a 529 plan may be part of a longer-term education savings strategy.
Because 529 plans can have tax rules and restrictions, it’s a good idea to speak with your financial advisor before you open one.
What do I need to open the account?
You may need to bring the following items:
- The child’s name, date of birth and Social Security number
- A parent or guardian’s government-issued photo ID
- The parent or guardian’s Social Security number
- Contact information, such as address, phone number and email
- An opening deposit, depending on the account
How can I help my child use their account?
Start with simple conversations. Talk about what they want to save for, how much they already have and how long it might take to reach their goal. You don’t need to turn every conversation into a lesson. Small, everyday moments can make a big difference.
You might encourage your child to:
- Deposit part of their birthday or holiday money
- Save a portion of their allowance
- Set a goal for something special
- Watch their balance grow over time
- Talk about saving, spending and giving
As they get older, you can involve them more. Let them come with you to the bank to make a deposit or review their account balance. These small experiences can help banking feel familiar.
Our number one tip? Keep it fun, says Copley: “Kids tend to learn best when they can connect the lesson to real life. Maybe they’re saving for a new bike, a special outing or something they’ve had their eye on. It helps saving start to feel less like a rule and more like something they’re excited to do.”
Your Next Read: How to Teach Your Kids About Budgeting
Once you’ve set up a savings account for your child, you can begin teaching them about financial literacy and budgeting – in fun, age-appropriate ways. Check out our blog to get more ideas for both younger children and teens.
