Why opening a minor savings account early can help build better financial habits
By learning how to save, track money, and understand the impact of the savings account interest rate, children can develop skills that support better financial decision-making over time.
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The world is constantly evolving, and so are its financial systems. Modern Indian banking has come a long way, thanks to digital banking infrastructure and technological advances, and is making progress by leaps and bounds. It is only practical and prudent to start building the right financial habits early.
The way children understand money, spending, and saving can influence their long-term financial behaviour. Opening a bank account for kids is a practical way to introduce these concepts in the real world under a guardian’s supervision.
A minor savings account allows children to handle money beyond spending. By observing how savings accumulate and earn returns based on the applicable savings account interest rate, they begin to understand the value of money management and financial planning.
Introducing children to saving early
Children learn best through hands-on experience. A savings account gives them a simple way to start saving, understand the importance of setting money aside, earn returns, and build an emergency fund.
Instead of viewing money only as something to spend, they begin to associate it with goals and future security. Even small, regular deposits can help build a sense of responsibility, investments, and financial awareness.
Building consistency in financial behaviour
A bank account for kids motivates them to build regular saving habits through routine. When children regularly deposit money, they begin to develop financial discipline in managing their funds.
Parents can guide this process by encouraging children to:
- Set aside a portion of their pocket money in their savings account
- Set an achievable savings target
- Avoid impulsive spending
Over time, these actions help create a disciplined, structured approach towards budgeting and financial planning.
Understanding how savings grow
A key advantage of a savings account is that it earns interest on the balance maintained. This introduces children to the idea that money can grow when it is saved. The savings account interest rate determines how much interest is earned. Observing this gradual increase helps children understand the benefit of maintaining savings over time.
Parents can even introduce children to digital tools, such as the savings account interest calculator, to show them how their savings can grow over the years if left untouched. Children can be exposed to the idea of long-term investments by teaching them that the accumulated sum in their bank account can be used for their own future, such as education, a vehicle, or international trips when they grow up.
Encouraging goal-based saving
Saving becomes more meaningful when it is linked to a goal. Parents can encourage this by helping children:
- Have a savings goal
- Track their progress
- Contribute regularly
- Incentivise their good financial habits
This allows the child to build patience and understand the value of delayed gratification.
Developing practical financial awareness
Managing a savings account helps children apply basic financial concepts in a practical way. They become familiar with balances, deposits, and transactions through regular use. This early exposure improves awareness and helps children become more confident in handling money as they grow older.
How to open a bank account for kids
5 easy steps to open a bank account for kids online:
- Apply online through the bank’s website or mobile application
- Enter details of the child and parent or guardian
- Upload the required documents for verification
- Complete the video KYC process
- Activate the account and begin using it
This process allows parents to open an account within a few minutes. If you choose to open a bank account for kids with IDFC FIRST Bank, you can earn interest up to 6.5% p.a. and get a ₹5 lakh child education cover.
Documents required for a minor account
Opening a minor savings account requires documents for both the child and the parent or guardian. They are:
- Proof of identity of the child: Aadhaar card or passport
- Proof of identity of the parent or guardian: Aadhaar card, PAN card, passport, or driving licence
- Proof of relationship: Birth certificate or bona fide certificate from school
These documents are submitted digitally and verified during the KYC process.
Supporting better financial habits from an early age
Opening a bank account for kids is a practical step towards building consistent financial habits. By learning how to save, track money, and understand the impact of the savings account interest rate, children can develop skills that support better financial decision-making over time.
The world is constantly evolving, and so are its financial systems. Modern Indian banking has come a long way, thanks to digital banking infrastructure and technological advances, and is making progress by leaps and bounds. It is only practical and prudent to start building the right financial habits early.
The way children understand money, spending, and saving can influence their long-term financial behaviour. Opening a bank account for kids is a practical way to introduce these concepts in the real world under a guardian’s supervision.
A minor savings account allows children to handle money beyond spending. By observing how savings accumulate and earn returns based on the applicable savings account interest rate, they begin to understand the value of money management and financial planning.
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