I recently opened a checking account for my 18 year old at our credit union. It was a real eye-opener. I think she was more excited about the ability to choose picture on the debit card versus the freedom of having the account!
Here’s what I’ll go over with my teenager about basic banking:
1. Checking and savings accounts. Checking and savings accounts are the basics of your financial life. It amazes me just how many adults cannot balance a checkbook these days. Instruct your teen that when they write a check or go to the ATM, remember to record it in the register as soon as possible. It’s an absolute must in a consumer based economy that we teach our kids that they cannot spend more than they have in their checking account.
Plus, they need to learn to save a portion of everything they earn. Start with 10%. Have them deposit 10% of everything they earn from the first day. Make it a habit. Money from that part time job will add up over time. It will be the best advice they ever get. I wish I had 10% of every dollar I earned from age 15. I probably wouldn’t be working!
2. Online banking. You might think this is fairly simple. Even for a generation that was raised on technology like Instagram, Snapchat and Twitter. It’s not. You need to sit down with your teen and show them how to transfer money to their savings (don’t show them how to move it from savings to checking!). Hopefully they don’t need bill pay yet, but you could show them how you do it.
3. Balance a checkbook. There are a few tricks to getting this to the penny. Make sure you show them how to do it. When I was young I recorded everything that I did in the register as I spent. That way at the bottom of the register, I had a true balance of what was available. There are lots of ways to do it, but make sure you show them a way that makes sense.
4. Using a debit card. Debit cards are really simple. The money comes right out of your checking account just like a check, but with the convenience of plastic. Show your teen how to use it at gas pump. I did and it was pretty cool to watch. Don’t forget they need to record these purchases in the register right away. The main point here is show them how to be responsible with the card. It will be their training ground for a real credit card later on.
5. Reading bank statements. Reading a bank statement can be daunting, even for adults. When the statements come, sit down with your teen and show them how to read it. As you know, it will be divided into sections that will make it easier. This is where the rubber meets the road. It will show you if they’ve been diligent about recording their activity.
It will be a little work to teach your teen about basic banking. It will payoff in the long run though, and it will give them a skill set they’ll use the rest of their lives. So don’t take it lightly. I just hope you can pry that small idiot box from their hands long enough!
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