Being a parent comes with responsibilities as well as joys. And while you may do your best to inculcate good values and the importance of a good education in your children, there is another aspect that you should not overlook: educating children on sound financial habits.
Usually, this begins with the concept of savings. And opening a Savings Account for your child, while he/she is under the age of 18 years, is a good step in that direction. A under 18 Savings Account requires a certain minimum balance like any regular Savings Account, but it comes with certain options and limitations which allow you, the parent/guardian of the child, to help the child develop an ability to manage their finances.
Basic Features
As mentioned earlier, Savings Accounts, even for minors, come with a minimum balance requirement. To add to that, the account has a maximum limit, after which the bank will usually deposit the extra amount (which exceeds a certain limit), into a Fixed Deposit account for a one-year period, in the minor’s name.
Further, the child will be given an ATM/debit card for access to the account, but with a lower limit than a regular Savings Account, in terms of amount. This helps ensure that while the minor has access to funds when needed, they do not overspend. Also, being a joint account holder with the minor, you will also get notifications of any transactions they make.
There are additional features of the Savings Account you can also take advantage of.
Procedure for opening the account:
Understanding how to open a HDFC Bank Savings Account for a minor is very easy, and the procedure is straight-forward:
- You need to have a Savings Account in your name at the bank you intend to open the child’s Savings Account in.
- You need to fill out the form for opening the account, with the minor as the first account holder, and you as the joint holder. You also need to submit your photographs along with this form. Some banks ask for the minor’s photograph as well.
- You need to submit the child’s birth certificate as age proof. The child must be below 18 years of age. As well as age proof, this is also required to establish your relationship with the minor.
- You need to submit your details, particularly PAN card information, as well.
- As the parent/guardian in this case, you may be asked to fill out a separate form with your information as well.
- The bank will also require that you submit address proof for the minor.
- Finally, the bank will ask for your signature for future transactions.
- Once all this is done and verified, the account is created, and the bank will hand over the documents regarding the bank account. You will also be given a cheque-book.
The first and most important step in encouraging your child to develop good savings habit always begins with finding out the different types of Savings Account that can suit your child. And that, is a good start indeed.
To open a Savings Account for minors, click here.
Click here to open a Savings Account.
*The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
Since minors generally can’t open bank accounts by themselves, you’ll typically need to be a joint owner of the account, which may actually be a good thing. It’ll give you the chance to compare banks and find features that are important to both of you. You can discuss pros and cons, make compromises and even adopt some new habits on this financial journey you’re taking together.
Maybe your teen wants a bank account that’s free of fees and doesn’t require a minimum balance because they’re just getting the hang of this money thing. That’s not too hard to find. But maybe you’re mostly interested in tracking their spending. An issue like that may be worth a discussion, so your child understands where you’re coming from.
For instance, there are joint teen checking accounts that allow you to receive alerts every time your child makes a transaction. But should you? When it comes to monitoring your kid’s checking account, privacy parameters will be up to you. Navigating these options together will keep the lines of communication open.
With banking apps, everything from money transfers to mobile deposits can be done in minutes. However, impulse purchases with the swipe of a debit card are just as quick. This can be an opportunity to talk about the difference between “wants” and “needs.” For most people, finding a balance takes time, and managing a bank account is one way to practice.
A teen checking account can even earn a little interest. If your teenager earns money on their own, they may be able to grow their money with interest.
Together, you can compare rates on checking accounts, savings accounts and even longer-term investment options like CDs. It can be an eye-opening exercise to see how your dollars may grow, depending on where you leave them.