Should My Teenager Open a Teen Bank Account? [Expert Advice]
Today, savvy parents know how important it is to teach our teens about money and how to properly manage it. After all, this is the time in their lives where they will likely get their first job and paycheck, so it is crucial that they are aware of how to manage their money as well as the responsibility that comes along with it.
In addition, opening a teen bank account it is a great time to reinforce the savings habits we taught them when they were younger and guide them to a path of financial literacy that will lead to responsible money habits as they begin going to college, living on their own, and working to pay their own expenses.
What Teen Bank Account Options Exist?
Today there are a variety of different types of teen bank accounts, with the most popular being a savings account and checking account. A teen savings account is a pretty standard way to demonstrate savings by placing a portion of your teen’s paycheck into the account automatically. This lesson will translate into them saving for their retirement and investing in their retirement plan or 401k. Teaching your teen about saving for the unexpected in an emergency fund is another great lesson to share that will set them up for success in the future.
Another common teen bank account is a Teen Checking Account that will help your teenager learn more about managing their money and keeping their finances in order. Maintaining their own Teen Checking Account is the perfect way for teenagers to learn how to be responsible with their paycheck while giving them priceless experience that can go a long way for financial independence as they mature.
Local lenders with Teen Checking Account options may also offer teens a debit card to use with their checking account that can give them the financial freedom they crave with easy access to their money as well as online options to manage the accounts. Once your teen is fully able to manage their checking account and debit card without supervision, you know they may be ready to take the next step to build their credit. When considering the perfect Teen Checking Account, always consider what fees are associated with the account. Be sure to check if Remote Check Deposit is an option and always verify how many ATMs are accessible.
When your teen has shown financial independence, it may be time for them to apply for a credit card with their local lender. Typically, teens can build their credit and learn how to navigate their finances while having their parents linked with their account as an authorized user. This will give them the spending power they need while being held accountable for their purchases by parents who want them to learn how to successfully manage their money and how it effects their credit score.
Here are some of the benefits of having a teen bank account:
Teen Bank Account Benefits
- A Head Start to Financial Responsibility – Having a teen bank account allows your child to learn what it takes to manage their own money and bank account. It teaches them to track spending, how to use an ATM, electronic/online banking, money management, and more while living at home so you can guide them and teach them to be responsible with their money.
- Establish a Good Financial Reputation – A teen checking account can help establish a strong foundation for a solid financial future. And although a teen bank account like checking or savings does not actually influence their credit score, it can be used by local lenders to prove they are responsibly managing their money. Having a teen checking account is a great way to ensure their financial reputation is headed in a good direction.
- Learn Useful Money Management Tools – Most credit unions and local lenders offer money management tools that can be useful to those with teen bank accounts. These tools help track expenses and create budgets that they can use to learn the proper way to manage their money.
- Learning in a Safe Environment – We have all made our financial mistakes and know they can be costly. From excessive ATM charges to unexpected overdraft fees; these mistakes are typical among new account owners. With the support and guidance from parents, mistakes teens make with their bank accounts can be fixed and even avoided as parents advise them against actions that may cost them fees or that might risk negative balances from overspending.
How to Decide if a Teen Bank Account is Right for My Teenager?
A teen bank account is a great tool to help your teen learn financial responsibility while you can still observe how they manage their money and look out for errors. It can also help your teen learn how local lenders operate and the difference between a bank and a credit union. If your teen is working and earning a paycheck, or if they receive a regular allowance, it is probably time to open a teen bank account so they can learn how to manage their own money.
Where to Find the Best Bank Accounts for Teens
The best place to find the perfect bank account for teens is with a local lender that you trust. It is smart to do your research to see which lenders have the best teen bank accounts in your area. Be sure to compare checking account, savings account, and credit card options for your teen while researching the benefits, rates, and requirements involved with each account option. If you are ready to open an account for your teen but need help deciding which is best, please contact Members Plus Credit Union today!
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