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Preparing Your Child for the First Day of School? Here’s Why You Must Consider Opening a Child’s Savings Account Too
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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It is important for you as a parent to instruct your children about the importance of money in this present tap-and-go scenario where money is rarely transferred physically and is instead spent more quickly through the online mode. Inculcating your children with financial knowledge would provide them with a good foundational understanding and help them make better calculative investment decisions without any hesitation in the future
While financial literacy is important to increase skills and knowledge required to manage finances and attain financial growth, not much emphasis is given to tutoring children about money and finance in school. Here’s where you as a parent must step in and ensure to dedicate some quality time for teaching your children about money and financial discipline. One of the fundamental ways to make your children financially literate is by opening a savings deposit account for your kids.
Developing familiarity with money through saving deposit accounts at an initial phase of life can make your children financially responsible adults. Discussed here are some of the benefits of savings account for kids –
No matter how well a theory is explained, practical application always surpasses it. The same is true in the case of money and finance too. No matter how much you verbally instruct your child about fixed deposit, recurring deposit, income generated on saving bank interest rate, SIP (systematic investment plan) mutual fund, etc., your child would always learn better when you provide them the experience of managing an account.
As the name suggests, a savings bank account is used for saving funds and conducting daily transactions with ease owing to its high liquidity feature. Do you remember how ages back, children used to keep a piggy bank to save the money received as gifts from grandparents and relatives? A savings bank account for minors works the same way, i.e., it helps to cultivate the habit of saving.
As your children view the rise in savings account balance over time, they get motivated to enhance it more by saving even more. This teaches them the value of money that they must not unnecessarily splurge their money. Building the habit of saving and investing money from an early age also teaches them to avoid relying on massive debts to meet their future financial goals as they turn old.
Over time as the savings of your children increase, you can introduce crucial investment avenues to them like fixed deposit, mutual SIPs, recurring deposit, etc. Through these financial avenues, your children will understand the value of the compounding effect, which would encourage them to begin with investment as soon as they start working.
How to open a savings account for children?
Opening My Junior savings account is a straightforward and effortless process. Visit Kotak’s site, search for an open savings account for children option (My Junior account) and hit on apply now. Fill out the details correctly in the application form and apply. You will also have to attach minimal documents along with the application form for a quick and hassle-free approval process. These documents include identity proof (driving license, Aadhaar card, voter’s ID, or passport), address proof (updated bank account passbook, voter’s ID, passport, driving license, bank statement, or Aadhaar card), signature proof (passport, driving license or PAN card) and minor proof (Aadhaar card or birth certificate).
Once you have filled out the account opening form and submitted the required documents, your savings bank account will be active in just a few days. So, remember that it is never too early for you to encourage your kid to learn about financial literacy.
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