Understanding transactions in a minor’s account is crucial for parents, grandparents or legal guardians who want to teach children about managing money and saving for their future. This blog explores the different transactions in a minor’s account, and how to ensure the safety and security of such transactions.

In addition, it further emphasises the importance of ensuring that the transactions done in a minor account are in the best interest of the minor and used for the child’s benefit.

A minor account is defined as a bank account or investment account that is opened and managed for an individual who has not yet reached the age of majority, which is typically 18 years old.

Such accounts help teach children about managing money and saving for their future. They act as the custodian of the account, also known as a custodial account until the child reaches the age of majority.

In most countries, minors are not allowed to enter into legally binding contracts or make financial decisions without the consent of their legal guardians or parents. Therefore, a minor account is usually set up and managed by a parent, legal guardian or custodian, who acts as a signatory and is responsible for overseeing the account on behalf of the minor.

A minor account is a great way for parents and guardians to inculcate healthy financial habits into their children from a very young age, such as:

• Budgeting
• Saving
• Investing
• Money management

Practising these aforementioned habits not only helps children learn about financial responsibility but also allows them to build a credit history that they can use later in life.

A minor account transaction refers to any financial activity that takes place within a minor account. This may include the following:

• Making Deposits: Parents or legal guardians can make deposits to minor accounts. Henceforth, they use this money to save for their child’s future expenses like education, marriage or any other long-term goals.
• Making Withdrawals: A legal guardian or a parent can make withdrawals from a minor account, but only for the benefit of the minor and with their interest in mind.
• Making Transfers: Parents can transfer money from the minor’s account to other bank accounts, such as a different joint account held by the minor and legal guardian or parent. They may also choose to transfer to a different third party account, as well.

Usually, a legal guardian or parent helps with online transactions. They must be present to approve and oversee the transactions. This is vital for ensuring that all transactions are safe and secure and that fraudsters and scammers do not take advantage of children. In addition, the legal guardian or parent must provide the necessary details for completing the said transaction.

Therefore, yes, it is possible to do online transactions using a minor account so long as a guardian approves of them.

Transfers from a minor account can be made with the authorisation of a legal guardian or parent to other accounts, such as:

• Guardian’s account
• Parent-child joint account
• Trust account
• Investment account

Moreover, a legal guardian or parent must ensure that said transfer is in the best interest of the minor and that the money will be used for said child’s benefit.

In some countries, the government allows minors to make deposits. Meaning, they can learn how to generate revenue via part-time jobs or allowances, and deposit it into their respective minor accounts.

Only parents or legal guardians can make withdrawals, which must be for expenses that are necessary for the child’s well-being and future, such as:

• Higher education
• Medical care
• Marriage
• Other long-term goals

A legal guardian or parent must provide authorisation for any withdrawals that are not made in person at the bank branch.

Once a minor reaches the age of majority, they will be able to access the funds in their account and make withdrawals without the need for a legal guardian or parent to authorise them. However, some countries have different age limits, like 21 years.

Minor accounts are a great way to teach children about managing money and saving for the future. Overall, one must check all laws and regulations relating to all kinds of minor account transactions before opening a minor account. In addition, individuals should consult with financial experts for any doubts and queries.