I was stunned after I asked mother and father to tell me the life skills they need their kids knew, and there was a powerful request for kids to discover ways to open a bank account.
Similarly, there was a huge call out for:
Easy methods to finances & balance accounts
The way to write checks and pay bills
And how to start saving for retirement
It appears some of the things we take for granted are, as a result, lacking from what we train kids.
This article is the primary article in the 4-part series and will talk about one of the best and easiest way to get started with opening a bank account.
It seems simple, however there are several questions many people never think of that we’ll address in this article:
Checking or savings account?
Are there fees or minimum balances?
Ought to I get a Debit Card too?
Should I’ve my name on the account with my kid?
1. Choosing a Bank
Once you choose a bank, there are just a few criteria you’ll want to look at:
Number of branches
Ease of access
The situation ought to be convenient to your house, but in addition have sufficient branches so that – within the case of an emergency – you can get to your bank.
I opened an account with Elevations Credit Union when I was attending CU Boulder. It was convenient and credit unions are really great to bank with. Nonetheless, after I graduated and moved, there were no branches around me, which made things very inconvenient. I ended up opening an account with US Bank since they’re in about every King Soopers, the place I do my grocery shopping.
This is especially vital with kids because you don’t want them to have to drive too far just to bank.
Similarly, ease of access into the branch is important. I bear in mind having a Norwest (now Wells Fargo) account, and getting out and in of the bank’s parking lot was terrible. I had several near-miss car accidents and dreaded even going to the bank.
2. Checking or Savings Account
As you will learn sooner or later article about saving and budgeting, there must be an account that is used for saving and investing.
Meaning it’s essential to have BOTH a checking and savings account.
The reason a checking account is important, is so that kids can learn how to write checks, and have a designated spending account aside from a designated financial savings account.
Checking accounts are essential for paying bills (be it on-line or through mail) and will give kids the opportunity to discover ways to write checks. Even if check writing is not as prevalent as it once was, it’s still important.
I was shopping sooner or later and realized I forgot my wallet, which had my credit cards and cash. I started to panic because I wanted some food. Luckily, I keep a few checks within the automotive and was able to save myself by writing a check… they still turn out to be useful!
3. Charges & Minimum Balances
Some banks have charges to have an account and others don’t. Clearly get the one that doesn’t since your kid should not have a huge account. Likewise make sure there is not a minimum balance or a really small ($10 or less) minimal balance.
Just as necessary is how overdrafts are handled!
When I was in faculty, it never failed: my peers (who hadn’t discovered find out how to balance an account) would routinely set off their overdraft protection and the hefty fees that went along with it.
They would look at their balance online and it would show $10. Then they’d check it again a few days later and it was at $30.
It was the magical rising bank account; and so they by no means wondered the place the extra money came from. Till the tip of the month when they had over $200 in overdraft protection charges!
I’d recommend NOT getting overdraft protection and instead making darn positive they can balance their account (which we’ll cover in a future article).
4. What A few Debit Card?
Here is my thoughts on kids having debit cards: it makes it much, much harder to balance the bank account while making it a lot simpler to overspend and run into trouble.
Are ATM machines convenient? Yes, however I’ve by no means once used one in my complete life. Part of teaching kids life skills is to teach them to be prepared. I keep an additional $10 in money plus a number of checks in my car. It would not trouble me if it bought stolen.
For those who’re determined that your kid gets a debit card, wait at the least six months after opening their account to allow them to study “the old fashioned way” and understand how the debit card affects their account after they really start using it.
5. Should I Be On The Account Too?
I think it’s an excellent idea for you to be in your kid’s first account so you can monitor their spending and make sure they do not cause a train wreck.
It is good to get statements so as to use that as a learning experience to go over them with your kid and train them easy methods to properly get rid of them (in a shredder) so that they lower their risk of identity theft.
Come up with a time frame or benchmarks until you pull yourself off the account and let your kid take on the responsibility of an individual account.
Opening a bank account is a big step into a new world for kids and it must be a terrific experience. Walk your kids through the setup and look for the learning opportunities alongside the way.
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