Take precautions online - By the time children are old enough to have a bank account, chances are they will already be very comfortable in the online environment. Online banking can be safe, but you should still make sure your child is taking precautions. Make sure they choose a password that only they would know, using a combination of letters and numbers, keep their password private and never share it, and check the website's security. In most browsers, you can determine this by looking for a closed lock icon.
Review monthly account statements - Even if your child is not making many transactions, get a monthly account statement. Go through it together and check that everything is correct.
Check in - Take a few minutes from time to time, either online or when visiting your financial institution, to get a summary of your current accounts and interest rates. Compare this to other options that are available. Does your account still meet your needs or has your situation changed? Your accounts should be as flexible as you are.
Repeat, repeat, repeat - Every time your child is with you at your financial institution, talk about the banking process. Establishing smart banking behaviours from a young age will make it easier for your child to understand more complicated financial instruments in the future - such as loans, investments and retirement savings.
Look into Tax-Free Savings Accounts - Increase your own savings with a Tax-Free Savings Account (TFSA), a new savings vehicle for Canadians. Any contributions made to your TFSA will not be deductible for income tax purposes; instead, any growth in the account will not attract tax and when it is withdrawn the money will be tax free. Talk to a financial professional about TFSA's or learn more about them online.
at your financial institution
Understanding how to use a bank or credit union is one of the most important financial lessons to teach a child. You should be familiar with the benefits financial institutions offer in helping manage money.
Open a savings account
Savings accounts keep money safe and can provide a cushion against future expenses. Interest is earned on the money put into savings, which may be calculated daily, monthly, semi-annually or annually. It is important for children to have a savings account, even if they only deposit a small amount each month. Getting in the habit of depositing money will help them to understand how banking and interest works.
When opening an account with your child make sure to do the following:
Figure out what they need - What is the account for? Is it just for saving? For making purchases? Do they want to use a debit card? Access their money online? Are there extra fees for these features? Have your child make a list of features they would like their account to have and rate them on a scale of importance.
Shop around - Once your child has decided on account features make sure to shop around to find an account that will best fit their needs. Most Canadian financial institutions offer special youth savings accounts with a variety of features, but a regular savings account may offer benefits your child prefers, so it is important to compare carefully. You can get a lot of information about different accounts by going to the websites of local financial institutions.
Have your child bring the list of desired account features to different financial institutions and see what types of accounts are offered and what interest rates they are going to pay. You want to be comfortable with your financial institution. Don't be afraid to ask lots of questions and make sure you both understand what you're getting!
Review their accounts
Even if your child already has a savings account, it is important they understand how it works and what it offers. There may be newer and better account options available now so next time you are at your financial institution schedule a meeting with an account representative to learn about different options. Have the account representative explain the features of the account to see if it still fits your child's needs. This is also a wise exercise for you to go through periodically with your own accounts.
Teach them how it works
Going into a financial institution should be a comfortable experience. It is important to understand what to do and how things work. Ask your account representative to give you and your child a quick tour of the facility to explain the banking process. Don't be shy about asking questions. Where does the money go? How is a deposit made? How about a withdrawal?