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From their first tooth to their own apartment: a bank account for a baby will be a loyal companion throughout their life – for keeping financial gifts safe, building up assets and teaching them how to handle money from a very young age.
Does the stroller need new suspensions? Or does the baby sleep better when it’s a bit bumpy anyway? Parents know their babies so well. And now the baby’s godparents or grandparents are asking if they can open an account for the baby. Here are the answers to the most important questions about accounts for babies.
Of course, your baby can get on perfectly well without an account – but opening an account still makes sense for several reasons:
It’s still important for children to have a physical money box, as it teaches them about money with all their senses.
There are usually two types of account for babies and young children that are particularly suitable for saving: a gift savings account and/or an account with an investment solution. Depending on how you want to save for your child – whether in the short term, long term or with a specific goal in mind – it’s best to choose one or the other – or both.
In Switzerland, a gift savings account is usually opened by the parents, godparents, grandparents or other people close to the family and is in the child’s name. It is initially managed by the adult and can theoretically also be closed by the adult. As a rule, however, it is transferred to the child when the time is right, and at the latest when the child comes of age.
A savings account solution is ideal for the simple management of financial gifts and for saving up for a specific purpose over several years, for instance to allow the child to spend an exchange year abroad or to pay for driving lessons. The payment options are simple and flexible: small or large amounts, one-off transfers or regular payments by standing order.
Account management is usually free of charge, and the child generally also benefits from a more attractive interest rate. And depending on the provider, there may also be an extra little gift for the child, such as a money box.
Another option is an account with an investment solution, such as an investment fund account for investing savings. As money for children is often saved over a long period of time, this is particularly worthwhile: the longer the assets remain invested, the higher the potential returns. If money doesn’t need to be available at short notice, this is usually much more worthwhile than leaving it in a savings account.
An account with an investment solution can also be opened as a gift by an adult in the child’s name. As a rule, it is transferred to the child when they reach the age of majority. It is a good way to introduce children to the topic of investing and asset growth at an early age.
Depending on the provider, you can pay in money flexibly, although a minimum amount such as 50 francs may be required. Regularly investing money via standing order is a particularly effective way for the person giving the gift to build up assets for the child.
If the account is in the child’s name, the money also legally belongs to the child (“child’s assets” according to the Swiss Civil Code). However, it is managed by the person who opened the account until the child reaches the age of majority. This is often the parents.
But even if the account was opened by somebody else, you as parents have an important role to play: from a certain age, a bank account becomes an important tool for financial education.
Discuss with your child where financial gifts should go – for example if money from their money box should be paid into their bank account – and what it should be used for. It is also advisable to explain to your child that financial gifts and a gift savings account should not be taken for granted.
As soon as your child is mature enough, you can explain the concepts of saving and investing in more detail. You could set money aside in different containers for different purposes, for example in a wallet for everyday expenses, in a money box to save up for a specific toy, and in a savings account with an investment solution for larger items on their wish list for the future.
As you can see, an account for a baby is an ideal starting point for your child’s financial education.
From their 18th birthday, your child theoretically suddenly has free access to the savings overnight. At the age of majority, your child becomes legally independent and can generally dispose freely of the money that was previously managed by an adult.
For this reason, it is recommended that gifts of money are closely monitored. Talk to your child at an early stage and explain where the money comes from and stress that such gifts shouldn’t be taken for granted. This helps to raise awareness of value and responsibility. You should also discuss the child’s finances together as equals:
This also leads the conversation on to other important topics such as budgeting and long-term wealth accumulation.
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