Primer on Kiddie Savings Account: The Secret to Your Children’s Future Wealth

By JR Maniego, RFP®

You would be surprised to find out that 80% of American millionaires today are first generation millionaires, according to best -selling book “The Millionaire Next Door” by Thomas Stanley. They created their own wealth, starting from their first million on to the next. While this statistic might not hold true in the Philippine context, we can make it true for our children, the future generation, by instilling in them the foundations of a millionaire mindset, which involves saving at an early age.

Instilling in our children the mindset of putting away money for a rainy day not only teaches them the value and importance of being frugal, but actually gets the ball rolling on their path to financial freedom in the future. An easy way to get them started is by opening them a “kiddie” savings account.

Over the last few years, the Bangko Sentral ng Pilipinas in tandem with a few Filipino banks has launched the “Banking for Your Future Kiddie Savings Program. This program, which was launched in 2011, started to offer savings accounts to the 12 million Filipino school children up to 12 years old with the aim of teaching kids 12 years and below the value of savings starting at an early age. Hence today, the program has indeed achieved success as smaller banking institutions have followed suit in providing specialized savings accounts such as these.

The requirements

Opening a kiddie savings account is very easy, in fact by law, any child who can read and write at the age of at least seven years old can legally open a savings account, time deposit, withdraw, deposit using their own names and signatures (presidential decree no. 734 issued 1975). It only requires the parents or guardians an initial minimal deposit (P500 for some banks) and any form of documentation of the child, which includes the child’s birth certificate, school I.D., or baptismal certificate along with two valid I.D. of the parent or guardian.

Some banks do not even require the presence of the child upon opening of the account. After which, the parent or the guardian has the option to choose between being issued an ATM or a passbook that comes with the account. The parent can also opt to have the kiddie account linked as a third party enrolled account which will allow them to execute manual or scheduled automatic online or phone banking fund transfers. The ATM card will be encrypted with a 4-numbered PIN password / combination of your choice which will make your child’s financial information secured at all times.

Savings for teenagers

For teens, an ATM / debit card may be issued giving them hands on experience of allowing them to manage their own savings. The card may act as an allowance card where parents can automatically make regular fund transfers instead of giving them cash making their child more conscientious of the amount of money that they can withdraw from their ATM accounts. The kiddie savings account can also act as a cell phone reloader or a debit card where children can make the needed fast cash transactions most especially during times of emergency without the hassle of having them carry a substantial amount of cash. These features are made to be easily accessible via many different channels like over the Internet or through ATM machines conveniently located almost anywhere.

In theory, a kiddie savings account is very similar to a regular savings account. The differentiating feature is that it these kiddie savings accounts usually have a lower maintaining balance than your regular savings account. It also has a lower maintaining average daily balance features which allows the account holder or the child to earn interest at lower amounts.

Your child might be too young to understand the concept of money, of savings or of financial freedom, but the fact that a bank account exists under your child’s name, and you make a regular effort to slowly put money, guarantees that steps are being taken to build your child’s wealth until the time comes when you child is old enough to understand the value of your efforts and until he can compound this wealth himself.

*Disclaimer: This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of any institution, organization, association or firm.

Here are the general characteristics of existing savings account out in the Philippine banking market:

• BDO Junior Savers Club

  1. For children 12 years old and below
  2. Minimum initial deposit is P2,000
  3. Minimum average daily balance is P2,000
  4. Minimum balance to earn interest is P2,000
  5. Passbook provided
  6. ATM card can be used as shopping card at SM Department Stores and affiliate shops
  7. Special discounts at selected affiliate Shops

• BPI’s Jumpstart Savings

  1. For children 10 to 17 years old
  2. Also is an ATM savings account
  3. Minimum initial deposit is P500
  4. Maintaining average daily balance is P500
  5. Minimum average daily balance to earn interest is P1,000
  6. Additional features: Free 4 withdrawals per month
  7. Parent can choose to scheduled / automatic fund transfer from linked parents’ BPI account
  8. ATM can also be used as shopping card via the card’s BPI Express Payment System (EPS) feature

• Metrobank Fun Savers Club

  1. For children below 18 years old
  2. Minimum initial deposit is P500
  3. Maintaining average daily balance is P500
  4. Minimum ADB to earn interest is P4,000
  5. Welcome gift given at opening of account
  6. Free educational trust benefit worth 50,000 for accounts reaching minimum average daily balance (ADB)
  7. Free personal accident insurance worth twice the average daily balance for accounts reaching minimum ADB (up to 1 million pesos)
  8. Special discounts at affiliate shops

• RCBC WISESavings Account

  1. For children 7 to 14 years old
  2. For children younger than 7, parents can open a WISE account as an In- Trust-For (ITF) account
  3. Minimum initial deposit is P500
  4. Maintaining balance is P1,000
  5. Balance to earn interest is P5,000
  6. Parent can choose between having the account thru passbook or passbook account with ATM feature
  7. Free one-year personal accident insurance worth 20,000 pesos each for parent and child upon opening a WISE account with an initial deposit of at least1,000 pesos and with the parent 65 years old or below
  8. Can set scheduled / automatic fund transfer feature from parents’ existing RCBC Savings Bank accounts.

• EastWest Cool Savers Kiddie Account

  1. For kids day-old to 18 years old
  2. A passbook account
  3. Minimum initial deposit is P2,000
  4. Maintaining average daily balance is P2,000
  5. Minimum ADB to earn interest is P2,000
  6. Charge for below maintaining balance is 500 pesos per month
  7. Charge for two-year dormancy is P500 pesos per month

• UCPB Kiddie Max Account

  1. For children 0 to 18 years old
  2. Passbook or ATM card
  3. Minimum initial deposit is P500
  4. Minimum ADB to earn interest is P10,000
  5. Parents can fund the account via UCPB accounts through online or phone banking

• DBP Young Earners’ Savings Accounts (YES)

  1. For children ages 12 years and below
  2. Minimum initial deposit of P500 Maybank IM Teen Savings Account
  3. For teen between 13 to 17 years old
  4. Minimum ADB is P500
  5. Minimum ADB to earn interest is P5,000
  6. Can get a free ATM card
  7. With personal accident insurance and medical reimbursement benefit

• Robinsons Bank Tykecoon Kiddie Savings Account

  1. Minimum initial deposit is P2,000
  2. Maintaining average daily balance is P2,000
  3. Minimum ADB to earn interest is P2,000

• Citystate Student Savers Account

  1. For children 7 to 21 years old
  2. 2. Minimum initial deposit is P100
  3. Maintaining average daily balance is P100
  4. Minimum ADB to earn interest is P500
  5. Interest credited monthly

• Philippine Business Bank Campus Savers

  1. For students from elementary to college
  2. This is a passbook account
  3. Minimum initial deposit is P100
  4. Maintaining average daily balance is P100
  5. Minimum ADB to earn interest is 500

JR Maniego is currently working as a bank manager / trader specializing in fixed income distribution and bond brokering. He was granted the RFP in 2010. He has 8 years of banking and corporate experience in several areas like treasury, investments, investor relations, and sales. You can visit his blog at //youcanbestreetsmart.wordpress.com. For an introduction to bond investing, you can contact him through his personal email at jrmaniego2000@yahoo.com.