Types of Savings Accounts for Kids

Types of Savings Accounts for Kids

Saving is a skill that will help your child succeed for life. If your child wants to buy a new game or their first home, knowing how to save will help them achieve their goals. While a savings habit is essential, parents also need to know the best type of savings account for kids to help their money grow over time. Teach your child how to get the best returns on their savings and how to save money as a kid.

How early should we start saving for kids?

It’s never too early to start saving for your child’s future. The sooner you can start teaching kids about saving money, the easier it will be for them to create good money habits and build wealth from an early age. The most powerful force of saving and investing is compounding, when you earn interest and reinvest it to earn interest again and again. The longer your child’s money has to grow, the easier it will be for them to save for their goals and build lasting wealth.

How to save money as a kid

You can teach kids how to save money in stages. Consider teaching them how to save for a special toy with chore money or birthday cash. Work your way up to bigger goals as they learn how to save money as a kid. A GoHenry debit card for kids can be a fantastic savings tool. Kids can create multiple custom savings goals and set automatic transfers through the app to build smart savings habits.

Savings account options

As your child builds a savings habit, consider helping them set funds aside either through the GoHenry app or with a designated savings account. The best account for your child will depend on your financial situation, so check out the list of popular savings account options below.

Regular savings accounts 

A traditional savings account is a risk-free way to save and earn money with easy access to your funds. While you can open a regular savings account at most banks, interest rates tend to be extremely low.

High yield savings accounts

High-yield savings accounts are just like regular savings accounts, but they typically offer better interest rates. You may not find a high-yield savings account with your regular bank, but you can earn more interest by depositing your savings over time.

Online savings accounts

Some banks only operate online, but offer better interest rates on their savings accounts. If you're comfortable banking online instead of in-person, you could earn better returns with online savings. Kids already familiar with phone apps and technology might find online banking more engaging.

Other savings options

Besides savings accounts, consider investments that earn more interest over time. Bonds, CDs, or money market accounts may be a great addition when planning how to save money for kids.

Read more articles on saving here

Written by Kristin Yarbrough Published Jul 29, 2022 ● 3 min. read