A teenager’s first checking account is an important step for your child to get exposed to the world of financial planning. It is highly imperative for teenagers to learn the concepts of earning, spending, and saving from an early age to ensure that they are financially informed by the time they are ready to face the world alone.
Several large banks and financial institutions encourage teenagers aged 13 to 17 to use checking accounts for. Most banks don’t charge a maintenance fee to keep a teen’s checking account and the accounts can usually be opened with a very low initial deposit. As a parent, it is your duty to open a checking account for your kid early on in his/her financial career to set them on the path to managing their finances successfully. Here are 8 good reasons why your teen should open a checking account today.
To Learn About Money Management
Opening a checking account early in a teen’s developmental years will provide them with a clear-cut idea about money management and the different concepts of expense tracking and budgeting. Children will learn more about utilizing their existing financial resources by being able to track their account balance and spending accordingly. A lack of steady flow of income will also help teens to realize the importance of preserving money and maximizing opportunities.
To Develop A Sense of Responsibility
Having their own checking account will help teens become more responsible with their money and be accountable for their spending. Teenagers are not inherently good with their spending behaviors, they need to learn to be responsible for how they save and spend their money. A checking account is a good way to help your teen develop fiscal responsibility.
To Become Financially Independent
It is common for teens to ask their parents for money but relying on others to satisfy their monetary needs can have a negative impact on their financial future. Your children should learn to be financially independent by being able to withdraw money from their own account, or using a check or a debit card to make payments for their purchases. A checking account will give your teen access to their own money, which will hopefully reduce the amount of money they request from you.
To Develop Good Habits
Children don’t like the idea of boundaries and strict limits set by others. But by depositing their own money into a checking account, teens begin to get a fair idea about the limited possibilities of spending within the limits of their account balance. This can help them to develop good spending habits naturally, without intervention from elders.
To Start Saving For College
Once teenagers realize that they can actually grow the amount of money in their checking account, they will be motivated to save money for their college years. Teenagers can also be motivated to save money for their dreams such as owning a car, buying clothes or other necessities, or spending money on vacations or hobbies. Saving for a specific purpose will encourage your teen to take up part-time jobs or other careers that will allow them to raise capital for a set goal.
To Build A Good Credit Score
Having a checking account will help your teenager build a good credit score by careful spending using an authorized debit card. If you are careful with depositing limited amounts of money into the account and imposing spending restrictions on your kid’s debit card, you can actually help your child build a good credit score by the time they are ready to open their own bank account with their own credit card. A good account history will also help your child enjoy a higher line of credit from banks as well as other financial institutions.
To Learn About Savings & Investments
Exposure to a checking account that offers greater rates of interest on savings, such as an interest-bearing checking account, will open new possibilities for your teen when it comes to diversified investments and portfolio management. Some children are naturally talented when it comes to investments, but the concept of investments and returns should be embedded in their minds from an early age to ensure that they can understand the advantages of systematic investments.
To Gain Confidence
Teenagers with their own checking account are known to be more confident than their peers. Having access to a checking account gives your child the confidence of knowing that they are making their own financial decisions, which will reflect in their confidence levels and their ability to tackle life’s challenges. It will also expose your kid to financial instabilities, which will help your child develop a strong mental attitude to deal with adversity.
Banks make it easy for teenagers as well as parents to open a checking account with minimal formalities. Teenagers are offered the option of opening an account with as low as a $1 deposit, and most banks don’t charge any maintenance fees, which makes it relatively free for teenagers to use and maintain and full-fledged checking account. Always read through the bank’s terms and conditions before opening a teen checking account to prevent financial hurdles in the future.