Teaching Teens About Checking Accounts

Part of being a parent is providing our children with the financial knowledge and experience that will help them succeed in life.

Easier said than done, right? When it comes to money matters, it can be particularly difficult determining what age and maturity level is appropriate for handling checking accounts. Is your teen ready for the responsibility?

It seems that more teens today have access to debit and credit cards. However, checking accounts provide the ultimate in accountability. When your child is writing out a check and recording the amount in the ledger, the reality of money being spent really hits home.

Deciding when is the right time for your teen to become a checking account holder depends on a number of factors.

First, if your child has successfully mastered their own savings account, they may be ready to move up to a checking account. If your teen has had full access to their money and behaved responsibly, this is a good sign.

Also, if your teen has a job, they are probably a good candidate for their own account. Not only could they possibly benefit from direct deposit of their paychecks, but this account may make it easier to save a portion of their paychecks each period.

If your teen is paying bills for certain things, such as a car, car insurance, and credit cards, a checking account provides them with an easy, direct method to take care of these financial obligations.

And if you have an older teen who is at college or will be in the near future, establishing a joint checking account can make life easier for you. Instead of sending a check through the mail, you can deposit money directly into the account and have your child be responsible for making sure their debts are paid. Call it an investment in their financial future. Your teen is learning valuable money management skills, and you are putting your trust in them to be responsible with the account and your hard-earned cash.

When you’ve determined that your teen is ready to handle a checking account of their own, or a joint account with you, then it’s time to search out the best bank to do business with. This can be a challenge, since not all banks provide checking accounts for minors because they cannot be legally held to a contract. Obviously, this becomes a problem if there are unpaid overdrafts, for example.

If you’re having trouble finding a bank that provides these types of accounts, keep in mind that credit unions and local community mutual banks typically offer options for the younger set.

Also, each bank typically offers different types of checking accounts that you can choose from. Your best bet is to find out what’s available for teens under 18 years old and compare the features. Start with your current bank. First, ask if they offer teen checking accounts. If not, check to see if you can co-sign on their account or open one jointly.

In addition, it’s important to consider all banking fees your teen will incur before committing to an account. Are there fees if your child goes below a minimum balance? Will they be charged for using a teller? Is there a monthly ATM card fee?

Once you choose both the bank and type of checking account, there are a number of other considerations. Will you allow your teen to have a debit or ATM card tied to the account? This will probably depend on your child’s spending habits and whether they will be disciplined in controlling its use.

It’s also a good idea to teach your child not only how important it is to keep track of checking account transactions, but also about balancing their checkbook monthly. These invaluable lessons will help ensure your teen makes good financial decisions by keeping track of their money.

Check with their bank to see if they provide any materials or educational opportunities for your teen. There also are online tools, such as Facebook’s My Money application and other apps that can help your child keep track of their finances.

Realize that it’s important to keep close tabs on your child’s account. Set limits before the account is active. Some banks will allow you to do so automatically. Consider foregoing debit cards and allocating checks early on to limit withdrawals. Look at their statements each month, closely monitor debit card use, and regulate each withdrawal, especially in the beginning. Ensure your teen is being responsible from the get go. If not, don’t hesitate to close the account.

Checking accounts are a great tool for teaching your teen money handling skills. Learning to manage money at a young age will help set up your child with the skill set to make smart financial decisions in the future.