As your child grows into their teen years, it becomes the time for them to learn how to become more independent. This includes getting their driver’s license, working a part-time job, and having the tools to take care of themselves. However, there are five benefits to allowing your teen to open a bank account. By teaching financial responsibility and saving for rainy days, your child will become wiser and more confident when they adventure into adulthood.
Teaches Your Teen Responsibility
When your teen opens a bank account, one of the benefits that come along with it is financial responsibility. Having a bank account allows your teen to learn about tracking their spending, using their debit card, and having to withdraw from an ATM. It’s also excellent for teaching them the differences between credit union checking and savings accounts if they set up an account with a union bank.
Helps Build Financial Reputation
While your teen’s checking account doesn’t necessarily impact their credit score or history, it allows for future lenders to see their money management. By having your teen make smart financial decisions, future lenders will see their history of responsible money management and lead to positive opportunities, such as applying for a mortgage or car loan.
Saving for Rainy Days
When a teen receives money for birthdays, holidays, or bi-weekly paychecks through their jobs, it’s a natural impulse for them to want to buy something on their wish list. However, having checking and savings accounts will allow them to purchase necessities while building a stable savings account. Portioning a small percentage of their income towards savings will help them in unforeseen emergencies or hiccups.
Allows for Financial Mistakes
No one with access to money makes perfect financial decisions every time, especially when it comes to teenagers. Over drafting, not paying fees on time, and other mishaps teach teens about account management practices. With parental guidance, there’s more room for error and learning about overspending and reducing the risk of negative balances.
Learning About Money Management Tools
When your child has a checking and savings account to their name, they have access to money management tools to help track their spending. They can use these management tools to establish budgets, alert them of over-drafting, and schedule upcoming bills they need to pay.
Seeing your child grow into a responsible teenager can be a satisfying yet emotional time. So, allow your child to learn and offer tips to help them become the responsible adult they need to be.