Tiny Living and Money Matters

Money Matters: The working child and his savings account

We recently helped our eldest son Pablo open a BDO Junior Savers account. It’s been a plan for him to open a bank account and a Mutual Fund for him since we started giving him allowance every time he goes to his MAPE classes. The original plan was to open an MF account first, but we were prompted to do the savers account before the Mutual fund because of circumstances.

For one, he’s involved in a couple of professional projects and started earning his own money this year. We want to make sure that he will see the financial returns of his hard work when he grows up.

bdo-junior-savers
Secondly, because we were required to open one by the Department of Labor and Employment (DOLE). This is their way to protect working children from being exploited by the people around them.

The DOLE mandate

I used to wonder why the kids I’ve worked with in a project ended up with more money from the production we were in, while I had nothing to show for it. It’s only been recently that I realized that maybe it was because they were minors (below 18 years old) at the time of our production and were on strict adherence to rules set by DOLE.

Dragonball-production
Age of Wonder, 1996. Can you find me?

Since I was already considered an adult (who was extremely unsupervised and so uneducated with finances) in the said production, I ended up spending all of my earnings, not just from that production but in all the other gigs I had. I was that irresponsible with my money, OMG!

I attended a briefing with DOLE representatives and learned that at least 30% of the child’s earnings must go into his bank account or invested in a trust fund. They require the children to present these accounts every time they join productions so they can check if the children’s finances are being handled accordingly.

I think that it’s a good idea that the government is looking after working children this way. Personally, I believe that I should not be using my child’s money because as his parent and him being a minor, it is still our responsibility to provide for his needs.

Of course there are exceptions to every rule, but I don’t really know what they are for this one. My guess is that if you used your child’s money for something you deem is of value to him, best be ready with records and receipts to justify these spendings when you meet with the DOLE people.

Or maybe consult a lawyer?

Another thing about the DOLE mandate is that it ensures that the child is being compensated fairly for his work. According to the DOLE representative, many kids are asked to work without being compensated, in the guise of being given”exposure”  in the industry. This is against the law and a violation of their rights.

Opening a BDO Junior Savers account

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It was my husband, Jay, who went to BDO with Pablo. According to him, the process was easy. They simply presented the requirements — A copy of your child’s official birth certificate (bring the original) and a photocopy of his school ID (bring the original, as well) or Proof of enrollment, or his passport — filled out a form, and waited for approval.

The parent or guardian must also present a valid ID and proof of billing, one which carries the address you put in the child’s form. We didn’t have that since we rent, so they asked for the phone number of our landlady to verify our address.

My husband and my son walked out of BDO with Pablo’s Junior Saver’s passbook that same afternoon.

The minimum amount for a child to open a passbook account  is only Php 100. He needs to have at least Php 2,000.00 in his account for it to start earning interest. According to BDO’s site, the interest is 0.25% a year.

The site also states that the child gets a FREE ATM debit card or Junior Savers ID card. We only have the passbook, so far. I asked Jay about it but he says he wasn’t informed about it. We’ll just ask when we visit the branch. I want him to get his Savers ID even though I don’t really know what it’s for, haha!

I’ll update you once we are able to find out more about it, I promise!

(READ: Teaching Kids to Manage their Money)

No Check Deposits for BDO Junior Savers

Finance experts say that it is best to invest your money in the stock market instead of just putting it in the bank because your money grows more and faster in the latter. This is why we plan to invest a part of Pablo’s money in Mutual Funds so he can have passive income while growing up, but I think that him having a savings account is also necessary.

It can help regulate his spending which is hard to do when he has all his money within reach.

The bank is also a safer place to put his money. Pablo lost some of his savings when someone took his money from his wallet in his bag.

Then of course, we can easily transfer funds into his account from our BDO account.

However, you must know that you cannot deposit his checks in his Junior Savers account, even if the checks are in his name.

According to the BDO staff who attended to them, Pablo can change his account to a regular savings account that accepts check deposits when he turns twelve. Until then, we will have to encash all his checks and deposit them in his account in cash.

There are other benefits to a Savings account, such as being able to transact online conveniently and to apply for credits and loans, but those are not stuff we want to teach him at his age just yet. We want to stick to saving and growing, and properly allocating his earnings for now.

(READ: School allowance and money management)

Savings is good

For a parent, it gives great joy to know that you’re on the right track in handling your child’s finances. Although we would prefer to be the ones to put money into our children’s accounts, we’re doing the next best thing — making sure that the money they earn this young are put in the right places.  The LORD provides for my children, praise God!

Once we’ve completely set up Pablo’s Mutual Fund, we will start working on the accounts of our two younger kids – Savings and Mutual Funds. By the grace of God, we will be able to fulfill our dreams for their financial well-being.

I think every bank in the country has their own version of a kiddie savings account, and perhaps we’ll explore them with our two younger boys.

But if you want to know more about BDO Junior Savers, you can visit their official website for more details.

Happy saving!

Update: Our son opened an account with Metro bank a month later because it was a lot of hassle to have to encash his checks in another bank, then deposit it in BDO.  Just to be clear, we still think that BDO is one of the best bank services around.