Can You Open a Bank Account for Your Child?

3 minutes

Teaching your kids about money and banking is worth your while, not least because money issues are often cited as the number one cause of stress in the United States. You can help your kids avoid some of that stress as an adult by starting the money conversation when they’re young, and one way to get the ball rolling is by opening a bank account for your child.

Minimum Age to Open a Bank Account

There’s no minimum age to open an account as long as a child’s parent or guardian acts as a cosigner. In fact, many financial institutions offer savings accounts for children, which often include controls that allow parents and guardians to limit debit card access and cash withdrawals. Some banks or states may also have their own policies or regulations, so check with them about additional needs—including documents and so on—before opening an account.Since cosigning means you’ll be opening a joint account, each party will have partial ownership over the account, which means both you and your child will be held responsible. You’ll be liable for any fees or spending incurred by your child, so be sure to carefully monitor the account to ensure it’s being used responsibly.Once a basic account is open, you can help your kids see the value of planning, budgeting, saving, and setting goals. For example, you might help them get ready to buy a new bike they have their eye on by regularly putting a certain amount of money in their savings account toward the purchase. This sort of practice can help kids learn to handle bigger expenses later in life. To show kids how small purchases can affect their long-term savings goals, track spending from the account and talk to them about how withdrawals and spending now mean less money that’s available later. You can also put things into perspective for them with context; for example, you might ask them how many days of chores or weeks of allowance it will take to reach their goals.

Bank accounts for teens

As your kids get older, their banking needs may change and become more complex. Teens may get their first jobs, begin saving for their first car or college expenses, and start to pay for personal items like clothing.Parents and guardians still need to be joint account owners with their teens, who are considered minors. But to allow for more money transactions, teens may benefit from an unlimited, no-fee checking account that allows for more transactions, in addition to their savings account. While it’s a good idea to give teens a certain amount of autonomy over their finances in preparation for later years, it’s also important to keep in mind that their checking or savings account is still jointly owned. To make sure your teens can’t run up hefty bank or overdraft fees, talk with the bank about establishing controls that allow you to limit their withdrawals and spending.

What’s a custodial account?

A custodial account is an investment account that parents can put money into for their kids. Custodial accounts can be opened with a $9/month Stash+ subscription on Stash.Funds put into a custodial account are considered a gift and become the child’s money as soon as the account is opened. However, the child usually doesn’t have access to the funds until they turn 18, or until their parents choose to give them access to the money from the account.Many parents choose custodial accounts because of the flexibility they allow for, since the funds can be used for education or any other purpose that benefits the child.Custodial accounts may not be ideal for teaching children short-term lessons about saving, spending, and budgeting, but they can demonstrate the benefits of long-term investing, along with the benefits of earning interest over time. You can see how it works by opening a custodial account for your kids as part of a $9/month Stash+ subscription on Stash—and start your kids on the path to learning about how money works today.Investment advisory services offered by Stash Investments LLC, an SEC registered investment adviser. Investing involves risk and investments may lose value.

Stash offers three plans, starting at just $1/month. For more information on each plan, visit our pricing page.

Stash Subscription fee starts at $1/ month. You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the Custodian. Please see the Advisory Agreement for details. Other fees apply to the bank account. Please see the Deposit Account Agreement.

“Kids Portfolio” is a custodial UGMA / UTMA account. Money in a custodial account is the property of the minor. This type of account is a Non-Discretionary Managed account.

Janessa Boulay

Written by

Janessa Boulay

Janessa Boulay is the Director of Education at Stash101. She taught elementary and middle school students in Colorado before becoming an entrepreneur by starting her own software company, PayGrade, in her classroom. In June 2020, PayGrade joined forces with Stash and became Stash101, a free financial literacy platform that educates 100,000+ students around the country. Janessa loves bringing quality financial education to educators, schools, and organizations by creating content for Stash101 and presenting at conferences and on webinars. She truly believes financial literacy can transform students’ lives and empower them to build a brighter future.