Choosing a Bank Account for the Family: Where to Begin
A financial planner weighs in.
CREATED WITH EASTWEST BANK
Building a family entails having to provide for day-to-day life, unforeseen emergencies, and a stable education for your children. It’s never an easy place to start, so we asked associate financial planner Kenneth Corvera for advice on how parents can effectively save up with their kids in mind.
1. Find your purpose.
"Before opening a savings account for the kids, you need to decide [on] the purpose," Kenneth explains. "Is it for an emergency? Future medical expenses? Education?"
If the purpose is for long-term needs, it's better to get a savings account with a higher interest rate because you're looking at a bigger return on investment in the long run.
If the purpose is for short term, it's better to open basic savings or regular savings with a debit card—they're more affordable, have low initial deposit requirement, and are convenient to withdraw money from.
If you're looking at three- to five-year needs, it's more advisable to open a time deposit savings account; the bank will give you a bigger interest rate.
2. Have a pro-and-con list.
Corvera draws up some pros and cons when it comes to the types of bank accounts you might encounter.
Pros: "It has a low initial deposit of P100, minimum maintaining balance of P100 and low balance to earn interest requirement of P500. In case of emergencies, it can be withdrawn easily."
Cons: "Since it's very affordable and has a low deposit and balance requirements, parents are not forced to save [more] money for the kids."
Pros: "Its initial deposit, minimum maintaining balance, and balance to earn interest requirement is only P2,000. Kids love having their own passbook—they get excited every time you add money to their account. It doesn't have a debit card, which means it can't be withdrawn anytime."
Cons: "If its purpose is for a college fund, the interest rate may not be enough to grow your money. This also makes you more likely to spend it."
"If your purpose is to teach your kids the value of saving money, Kiddie Savings is the ideal savings program. It has a low initial deposit requirement, which can already earn interest rates."
Passbook Savings with Debit Card
Pros: "Its initial deposit is P10,000, has a minimum maintaining balance of P10,000, and an interest requirement of P25,000. This is better for parents who are willing to allocate a big amount for their kids."
Cons: "If you have a long-term purpose, this can be a disadvantage. When you have visibility on your savings, you're more likely to get tempted to spend it."
3. Be financially educated.
"Parents should be their own financial educators. Plenty of salespeople will sell us financial products; those who lack financial education are likely to end up making investments that do not really address their needs. Worse, they're more prone to scammers."
"Financially educated parents can confidently teach their kids how to save and invest the right way."
4. Explore your options.
Doing proper research and getting expert advice is key to your financial literacy as a parent. As you consider your options, one place you might want to explore is EastWest Bank. EastWest Bank's Peso Time Deposit offers one of the highest published rates in the market.
The EastWest Bank Peso Time Deposit provides flexible terms of 30 days to up to five years for a minimum initial deposit of P10,000 and can offer pre-termination (with minimal fees) should emergency needs arise. This is ideal for young families, empty nesters, or even retirees with excess funds to put aside and grow, so they can be secure in their life’s journey.