Junior savings account: Understand it to save more
Having a child changes everything in a family. Other than the additional costs that come with the new addition, as new parents, you will also need to plan about the baby’s financial future carefully.
Inculcating the right financial foundation in children is as important as teaching the child the alphabet. It doesn’t have to be difficult, and this lifelong financial education can start with a simple savings account.
Opening a junior savings account for your child can be a simple money lesson for him or her. Help your child puts money in the bank account and watches it grow. You can open an account for your child at any age from when he or she is a newborn to the age of 18.
It doesn’t matter where we save, as long as we save, right? Wrong. We’ve always been told “put your money in the bank”, but not “it’s which bank you put your cash in that counts”. However, choosing the right bank with the best interest rate for your child’s savings account can make a huge difference.
Junior savings account vs. adult savings account
Most people opt for savings accounts to keep their money due to the interest rates offered by the bank. However, unlike junior savings account, adult savings account offers considerably lower interest rates.
Living in Malaysia, your child will inevitably be given cash in the form of ang-pows/duit raya, during special occasions and festive seasons. Why not keep the money in a bank account that grows your child’s savings? With interest rates comparable to fixed deposit accounts, but with better flexibility, a junior savings account is a no-brainer for such situation.
Benefits of a junior savings account
Other than the cute coin boxes commonly given for free when you sign up, there are many other benefits to opening junior savings account.
Some of these benefits are:
- Teaching your kids the value of money – By opening a junior savings account, you can teach your children the value of money. Too many kids grow up thinking money come from ATMs and not through hard work. It is important for the children to understand that the money withdrawn from ATMs is there because you deposited it in the bank account.
- Teaching your child how to manage money – Starting financial education at an early age can be beneficial. Let your child see the balance in the bank account regularly and teach them how to prioritise their “wants” and “needs” in life. Teach them how to analyse what they want to buy and save for it.
- Making sound financial decisions – Being able to manage personal finances is a valuable skill to teach your children. This will help them make better financial decisions in future. You want your child to be able to manage their finances without you having to bail them out financially when they are adults.
- Getting used to delayed gratification – By having a savings account, your child can learn to set goals for the things they want to achieve or purchase. If they really want the new iPad, encourage them to save for it. This will give them an idea on how to accumulate money by savings and reward them with a sense of achievement when they finally get it.
Features of a junior savings account
- It is for those under 18 years old.
- It pays a higher interest rate compared to regular savings account.
- It limits the number of withdrawals per month.
- It usually restricts the method of withdrawal.
- It has a low account opening sum, with most as low as RM1.
- Some banks offer extra incentives, such as free personal accident (PA) coverage, cash rewards for excellent exam results, etc.
- And some banks provide coin boxes to help the children start saving at home.
Comparing some of the junior savings account available
Tips on choosing the best junior savings account
- Don’t be distracted by freebies and choose the savings account for your little one with a long-term vision in mind.
- Don’t procrastinate in opening a junior savings account. The longer you wait, the less you gain in interest.
- Don’t be too hasty. Do your research and compare the junior savings account available in the market before deciding on the most suitable one for you and your child.