Getting Your Teen Their First Bank Account

Mother talking to teen about opening a bank account

Banking is an important part of being a responsible adult. So it's something that every teen should learn before it's time for them to leave the next. To set your child up as an effectively independent adult, they need to know how to manage a bank account, savings account, and credit card. Even a little experience with the basics of banking can help them make good financial decisions at the beginning of their young adult lives.

While you may not be ready to hand your teen a credit card and let them loose, now is the perfect time to introduce your teen to the basics of owning a bank account. Many banks offer accounts that have additional protections just for underaged account-holders learning about banking. You can set your teen up with a monitored account that will allow them to learn how to manage their own money.

The Coolness Factor

There is something inherently awesome about a teen with their own bank card. It's empowering, it makes teens feel like they are trusted adults. And a teen's desire to be independent will actually lead them to greater financial responsibility. Because they'd rather use their own card than ask mom for permission to buy stuff, they will also start managing everything within the bounds of their personal budget.

The coolness factor will actually encourage your teen to become more financially independent and aware of their own spending.

Learning to Budget With Allowance

Watching their bank account, it's easy to see how spending lowers the amount inside while waiting for a new allowance re-up will increase the amount they have to spend. Some teens will 'burn down' their allowance quickly, but become more aware of how they do so. Others will immediately be compelled to start saving.

Almost all teens, when given a bank account, start figuring out how to budget. With the numbers laid out like that, money isn't as much about 'want' and 'mom, can I have...' and becomes more about what they can afford or what they want to save up for. With even a small amount of monthly allowance, teens will start learning to budget based on their desire to spend or save.

Motivation to Get a Job

The number of teens with jobs has declined in the last few decades, but there are always a few motivated adolescents out there hustling in the fast food and child care jobs they can get. Some actually earn taxable income, some just babysit and mow lawns. But the motivation is always the same: Income.

Giving your teen a bank account may have an unexpectedly positive side effect, the desire to get more money. Your teen may suddenly become interested in doing extra chores for extra allowance, doing paid work for neighbors, or even seeking an official after-school or summer job. Encourage your teen to find something they'll enjoy, whether that's lifeguarding or serving milkshakes on rollerskates, and watch them start their careers early on the innocent youthful desire for going-to-the-movies money or to grow their savings accounts.

Learning to Use a Credit Card

If your teen manages a debit card well, you might also consider opening a low-limit credit card for them. This is a great way to start teaching about paying regular monthly bills and to talk about building a healthy credit score with your teen. Before they do anything that could actually damage their future credit score. You can easily teach your teen to buy only as much on their card as allowance will cover, then pay it off in-full and on-time every month.

In fact, doing this will give your child a truly invaluable gift: A glowing credit score at the very beginning of their adult life.

Financial Independence After Graduation

Finally, there is the very real benefit of your teen already having a bank account when they're ready to leave home for college or their first real job. You want your teen to already know how to handle an account, how to pay bills, transfer money, use a credit card, and how to keep their balance in the black.

With an already healthy bank account and good banking habits by graduation, your teen will ready to blossom into an effective and financially wise young adult. Help your teen avoid all foolish financial mistakes by teaching them how to use a bank account early. Let them learn about banking with you nearby to ask questions and fix any mistakes before it impacts the beginning of their life as independent adults.


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