Custodial Account
Candlefocus EditorThese accounts have become popular not just as a way to save, but also as a way to help minors learn about money management. As minors cannot leave the money in the account untouched, the account serves as a way to teach good money habits and financial responsibility. Custodial accounts give the minor an incentive to save and manage their money for the future.
Custodial accounts can be opened at any financial institution, from banks to brokerage firms, with a parent as the guardian or custodian. The custodian is responsible for managing the account until the minor reaches the age of majority. Usually, opening a custodial account is as easy as opening an ordinary savings account, and the custodian will control any transfers or investments the minor will make with the funds in the account.
Custodial accounts are an excellent way for parents and guardians to help minors learn about money management, save for the future and gain access to tax-advantaged savings. They can be a great way to help a child's financial wellbeing by teaching him or her financial responsibility and encouraging them to save early and often.