Newborn babies need a strong start. All well-meaning parents want their newborn to have a strong financial foundation upon which to base his or her life. We do not want to watch them struggle through the challenges of life that could easily be fixed with money. Some parents have even suggested getting a credit card just for their newborn. This, however, is not a good idea. The reasons are pretty basic, but maybe you haven’t thought of them before.
Let Your Newborn Child Learn From His or Her Mistakes.
I know this is easier said than done, but after you spend years building their credit and you hand it to them on their 18th or even 21st birthday they are going to use it. Think about it: most young adults fresh out of college, or even still in college, are not familiar enough with the way the world works to be trusted to use it wisely. They do not usually have the funds to make even the minimum payment and then you hand them a credit card to buy what should be necessities only, they are going to go a little crazy. You will watch all your hard work float down the drain.
It is not exactly legal to get a credit card in your newborn’s name. It comes under identity theft. Even though you mean well, others may not. It opens the door for more places to assume the child’s identity. Most places will usually require you to provide a date of birth, and unless you lie, you will probably not be able to get a credit card place to issue you one.
So What Can You Do To Help Your Newborn?
This does not mean that you have to stand completely helpless. There are places that will let you open an account for your newborn. These are simply savings accounts that allow you to place money into it and hold it in trust until your child reaches a certain age. In most cases, you can set the age. This gives you the ability to help your child with student loan debt, a down payment on a new home, or just give them a good start.
There are programs at most banks, including Chase Bank and Bank of America, that will help you to get your newborn’s account started. You can also check of Gerber Grow Up Plan. You will find that there are many options available to parents that do not compromise your newborn’s identity.
The other great thing about this is you allow your child to learn from their own mistakes. They get the chance to learn the value of money. This is an essential lesson in life. They will not learn to manage money until they learn the value of money. This may be really hard to watch. It may mean that you watch them mismanage money, or struggle trying to make everything happen. It is, however, the best way to learn.