What Are the Rules for Opening a Minor Savings Account?

Every parent is concerned about their child’s future. Modern parents align more with the current scenario where they try to put their children more in sync with financial matters. This helps them become more independent in future, both financially and as a person.

However, your help as parents is necessary for the beginning, such as opening their savings account, making them understand things etc. In this regard, you need to follow and convey certain rules for opening a minor savings account.

Despite the simplicity of opening a minor savings account, you still need to follow certain rules. Respective financial institutions have set parameters for the guardian to follow while opening this minor’s account.

Note the following as some of the rules for opening a minor’s account while moving ahead with this.

• Check the Kid’s Age: Most financial institutions keep an age bar above ten years, while others maintain that within 10 to 18 years. Hence it is relevant to check the age limit of a minor’s bank account before doing so.
• Check the Eligibility Criteria: After checking your child’s minimum age for opening minor’s account, look for other parameters in the financial institution. They might check if you have any existing account in their institution from where the funds will be transferred. If you are not an Indian resident as the child's guardian, but the kid is, they will also consider that. Hence go through their eligibility criteria in detail.
• Go Over the Necessary Documents: The financial representative will ask for papers that will act as authorised proof of evidence for both the account holder and the guardian. These will include the kid's birth certificate, PAN card, and Aadhaar card details. Passport-size photos will be necessary for application purposes.
• Abide By Your Deposit Limit: Since your kid will be managing this account, financial institutions also make sure they progress slowly. Hence different financial institutions have a set bar for money withdrawal and spending limits.

In this regard, it is better to clearly understand how much money you will be giving your kid as an allowance. You can see if your limit aligns with the bar set by the financial institution.

It is significant to take into consideration that you follow all the eligibility criteria while opening a financial account for your child. In this regard, the following points must be followed so that your child faces no problem accessing the account.

Tip 1: Fund Transfer Feature: Enquire about how the money transfer will take place from your account to your kids. It is significant to know about the process of fund transfer in this case. Make sure whether you want to opt for a joint bank account or want to give a monthly, quarterly or yearly deposit to your kid's account.

Tip 2: Monthly Account Statement: Keeping everything under track will not only benefit your child in budget management but also for you to see how they are manoeuvring their responsibilities. This is possible if a monthly account statement captures that month's credited and debited amount. Make sure that the financial institution has this facility as well.

Tip 3: Online Facility: Another effective way to manage everything is by having access to the online feature of the savings account. This will enable your child to access other options for further profitable notions. Moreover, the online feature is easier to keep track of the money flow. See if they provide this facility to minors or not.

Tip 4: Other Features: Going over the financial institution's information is necessary to see what benefits it offers. Since you are opening a minor’s account, this is a crucial step so that your kid doesn’t face any possible issues regarding this in future. Know the minimum limit a financial institution will allow to keep in the kid’s account and whether it is possible to open a zero balance account.

It is normal for children not to understand the significance of money at an early stage. They might not even know where it comes from, the basic process of buying and selling, etc. However, opening an account for them is beneficial to familiarise them with this.

Following are some of the points your child can learn if they have a savings account:

• Teach Them the Value of Money: One of the main reasons behind children pestering for things randomly is that they hardly understand the worth of money. It might seem easy for them to get things because they are unaware of the process. Opening a savings account and letting them manage their monetary planning is relevant to inculcate this nature in them.

• Help Them Develop the Habit of Saving: Incorporating this habit from an early stage will help your child manage and save money. It is hard for them in the beginning, and they might be clueless about it. However, with proper guidance and help from parents and guardians, they will gradually learn how to do so.

• Help Them Gain a Primary Idea of Finance: Things have developed over time, and people generally use updated methods while making transactions or checking their monetary status. However, learning the basics of finance will make it easier for them to catch up with the modern methods of everything happening online.

It is not complex to open a kid’s savings account, and it’s beneficial to teach them everything regarding saving money, budgetary methods etc. You can easily overlook their financial actions and guide them through the process.

Apart from ensuring that you follow all the minor savings account rules, you need to stay updated on their financial journey. This is a way to encourage your child to take these small steps to become a responsible human while guiding them along.