Whenever our 3-year old daughter finds a quarter or a loonie lying around the house, she takes it and puts it in her piggy bank. Some people might call this stealing, but I see it as the early signs of a good saver.
Now that her piggy bank is getting full, I like the idea of setting up individual savings accounts for our children.
Related: RESP Account – Getting Started
One of the best ways to teach your kids some basic money management skills is to open up a savings account for them. A children’s savings account is the perfect place to stash allowance and birthday money and to help build savings for the future.
Best Savings Accounts For Children
Most Canadian banks and credit unions offer special no-fee savings accounts for children to help get them started. These accounts are pretty similar across the board, but with a few important differences. Pay attention to the details to find the savings account that’s right for you and your children.
Related: Canadian Chequing Account Comparison
Here’s a look at some of the best savings accounts for children:
| Bank | Account Name | Interest Rate | Other Benefits |
| ING | Children’s savings account | 2.00% | Parent must be an ING customer, no minimum balance, no debit card |
| HSBC | Premier youth savings account | 0.75% | Parent must be premier client, unlimited debit transactions |
| CIBC | Advantage for youth | 0.50% | Unlimited debit transactions |
| BMO | Premium rate savings account | 0.25% | 30 debit transactions, Earn Air Miles |
| Scotia | Getting there savings | 0.10% | Unlimited debit transactions |
| TD | Youth stepping stone | 0.05% | Unlimited debit transactions |
| RBC | Leo’s young savers account | 0.01% | 15 debit transactions |
The ING Direct account has the highest interest rate at 2%, but this account is restricted to ING customers only. It’s interesting to note that ING’s savings account for children pays a higher interest rate than their regular high interest savings account does at 1.35%.
CIBC’s children’s savings account stands out from the rest when you consider key features like a competitive interest rate and unlimited transactions. The HSBC account is only available to children of premier clients who have personal deposits and investments over $100,000. RBC’s Leo’s youth savers account leaves something to be desired, with an absurdly low 0.01% interest rate and limited debit transactions.
Related: No Fee Banking, No More Excuses
Parents will need their child’s Social Insurance Number (SIN) and one of the following documents in order to open a children’s savings account:
- Birth Certificate or;
- Passport or;
- Canadian Driver’s License or;
- Canadian Citizenship.
Savings accounts for children can be opened online with the above information in as little as 10 minutes. Alternatively, you can open the account over the phone in the same amount of time, or you can make an appointment at your local branch to open the account in person.
It’s worth noting that if your child is under 12 years of age, the account will need to be joint with a parent / guardian who is 18 years of age or older.
Kids are naturally curious and eager to learn new things. Setting up a savings account for your children is a great way to get them to understand how money works, to see the benefits of saving towards a specific goal over time, and to get them in the habit of saving money.
What do you do when you are in a deep financial hole? Thousands of Canadians declare bankruptcy every year because they can’t pay their debts. From 1990 to 2011 consumer bankruptcies increased from 42,782 to 77,993. That’s a whopping increase of 121.5%.
Declaring Bankruptcy
Past mistakes aren’t easily fixable but there are ways to climb out of the hole if you’re willing to do the work. Declaring bankruptcy should be your last resort. Here’s why:
Obviously some people just don’t earn enough money – whether you have been downsized, are underemployed, or unskilled.
If you’re frugal you can raise a family on a relatively low income, but frugality has its limits. If your debts are high it makes sense to pour your energy into making more money rather than just packing your lunch.
A temporary second job or money making hobby can allow you to direct funds to debt repayment.
Sometimes people deceive themselves about their spending habits. Keeping a detailed log of where and what you are spending will point out the money leaks.
Many people balk at preparing a budget, but it’s the only way you can keep track of your money. It doesn’t have to be elaborate. Sometimes just having general categories with spending guidelines can be enough, but you have to stick with it.
Improper use of credit cards is a primary cause of financial trouble. Studies have shown that people spend almost 25% more, on average, when they pay with a credit card rather than with cash.
Having too many credit cards, making only minimum payments, spending more when funds become available and accepting increased credit limits can quickly spiral out of control. Those is desperate circumstances should stop using their credit cards altogether.
Related: Best Balance Transfer Credit Cards
Simply over-spending is another concern. Whether it’s buying the latest electronics, too much house, a new car/furniture/wardrobe every few years, regular restaurant meals, long distance calls, gifts for their loved ones, or any other item that is simply a “must have”, if you can’t afford it – you don’t need it.
Some people don’t plan for any changes in their lives. Couples can base their debt load on two incomes but can’t handle it when they have children and expenses increase while income decreases.
You can’t presume you’ll always earn the same amount, or receive regular increases or bonuses, or even stay at your job.
Some people marry spendthrifts. Money is the most divisive issue in marriage and it certainly is not unromantic to note spending habits and discuss financial goals before marriage. If you are already married it’s more difficult to convert the over spender, but not impossible.
Divorce is not only a huge emotional setback; it is often one of the largest financial setbacks a person can experience. It’s costly to maintain two households and legal fees are enormous.
While sometimes divorce is the best alternative it’s often worth the effort to get couples counseling to make the marriage work.
Many people don’t carry enough insurance. An accident or sudden illness or disability can result in huge medical bills as well as the inability to continue working.
Related: Why You Should Protect Your Earnings With Disability Insurance
We always hear on the news stories of families losing all their possessions in a house fire. Budgets should be reworked to include inexpensive, bare bones insurance policies for disability, prescription and dental, and household contents. It’s much better than no insurance at all.
Often people don’t take responsibility for their situation and are unwilling to resort to extreme measures. They think that declaring bankruptcy is the easy way to wipe out their debts.
A bankruptcy stays on your credit bureau file for six years after discharge. This is long enough to get back into trouble again.
Most financial problems are due to poor decisions and a failure to plan ahead. If they can’t own up to past mistakes it’s unlikely people will change their behavior in the future. It’s not uncommon for some people to declare bankruptcy for a second or even third time.
Multiple bankruptcies stay on your file for 14 years.
Instead of blaming a spouse, the economy or unexpected bills, be honest with yourself and take the necessary steps to pull yourself out of debt.
After four—or more—years of hard work, you’ve earned your college degree – celebrate! Preparing for your life after school is a good opportunity to consider how your financial actions, as you transition to the working world, can have a big impact on your economic status going forward. I saw so many of my college classmates make huge blunders upon graduating that I knew would set them back financially for years and years.
Here are five financial tips for new college grads to make sure you aren’t living in financial regret.
1. Retain Some of that College Frugality
If you were like most college students, you weren’t living high on the hog while you were in school. Don’t you miss those gourmet Ramen noodle dinners? Yummy!
Related: Tips For Students To Save Money In University
While it will almost certainly be tempting to change your previously frugal ways now that you’re done with college, you’ll benefit significantly by retaining some of your thrifty behavior. Consider retaining inexpensive housing options, for instance, and avoiding routine expensive purchases, to the extent possible, such as costly food and clothing.
One of the biggest things that helped me is that I continued to rent even after I graduated. Not being burdened by a house payment and being able to split rent with roommates was huge! You’ll quickly recognize the advantages of having some spare money in your pocket and bank account.
2. Avoid Quick Spending on Big Ticket Items
There’s a great attraction for many new college grads to immediately purchase extremely expensive things: a new car, costly electronics, a complete new wardrobe, furniture, even a dream house. There may be new credit opportunities available to you that come with graduation and a new job and the temptation to use them can be highly enticing. But these kinds of purchases almost always mean taking on new debt, typically in huge amounts.
For most college students, already burdened by debt related school expenses, new debt can prove to be crushing down the road. By resisting the draw of big ticket purchases early on, those same items can be bought later in an atmosphere of economic security.
3. Developing a Plan to Retire Debt
As noted above, most college students graduate with education related debt, frequently in the tens of thousands of dollars. The financial impact is obvious, but the emotional and psychological effect can be significant as well.
Related: How Young Adults Can Still Thrive Financially
It can be a tremendous relief to develop a realistic plan that will address and settle that debt over time. Doing so may also assist on point number two above—big ticket item spending—by placing in bold relief how much money is already owed and why taking on additional debt at this time is a bad idea.
4. Earning Money on the Side
The typical college graduate has a commodity that most older people—who typically have families and other long-standing obligations—don’t: available time. That time can be spent earning money by doing something in addition to your regular job. It may be possible to leverage a hobby or other interest—computers, an artistic pursuit, etc.—into a lucrative part-time or weekend money-generating activity.
Another way to make use of your time, is to continue your education and earn a Master’s degree that will result in a higher paying job. There are a plethora of potentially lucrative programs and degrees available, but pursuing an online Masters in Business is a way to ensure that you will have a lucrative career. Online schools like Benedictine University will provide you with plenty of free information regarding their business program, so don’t be afraid to do a bit of independent research on the topic. At the very least, you will be constantly learning new and innovative ways of handling and saving your money.
This can put some extra cash in your pocket or help settle your debts a bit more quickly.
My buddy Martin from Studenomics has figured this out as he’s hustled with his blog and also a new venture where he shows you to make extra money by freelancing. There’s no time like the present to figure out some extra ways to rake in the dough.
5. Getting Used to Saving
It was probably impossible to establish a savings fund—a TFSA or even a meaningful savings account balance—while in school, but this is one area where a clear behavioral change upon finishing college can be beneficial.
Getting into the habit of putting at least a small amount of money away each week or month will pay dividends in both the short-term—by helping to avoid spending temptations and settling debts—and long-term—by allowing you to reach economic security more quickly and helping to establish positive lifelong financial habits.
Related: The Best Time To Start Saving Is Now
Graduating from college is a transitional time for most former students. If you use this opportunity to create a solid personal economic foundation, it can pay dividends for the rest of your life.