I was stunned when I asked mother and father to tell me the life skills they wish their kids knew, and there was a powerful request for kids to discover ways to open a bank account.
Similarly, there was an enormous call out for:
How one can funds & balance accounts
How to write checks and pay bills
And tips on how to start saving for retirement
It appears a number of the things we take for granted are, because of this, missing from what we train kids.
This article is the primary article in the 4-part series and will focus on the very best and easiest way to get started with opening a bank account.
It seems simple, however there are several questions many individuals never think of that we’ll address in this article:
Checking or financial savings account?
Are there charges or minimal balances?
Should I get a Debit Card too?
Ought to I’ve my name on the account with my kid?
1. Selecting a Bank
When you select a bank, there are just a few criteria you’ll want to look at:
Number of branches
Ease of access
The location must be convenient to your own home, but also have sufficient branches so that – within the case of an emergency – you will get to your bank.
I opened an account with Elevations Credit Union once I was attending CU Boulder. It was handy and credit unions are really great to bank with. Nonetheless, after I graduated and moved, there have been no branches round me, which made things very inconvenient. I ended up opening an account with US Bank since they’re in about each King Soopers, where I do my grocery shopping.
This is especially essential with kids because you don’t need them to must drive too far just to bank.
Equally, ease of access into the branch is important. I remember having a Norwest (now Wells Fargo) account, and getting out and in of the bank’s parking lot was terrible. I had a number of close to-miss automotive accidents and dreaded even going to the bank.
2. Checking or Financial savings Account
As you may learn sooner or later article about saving and budgeting, there ought to be an account that is used for saving and investing.
That means it’s essential to have BOTH a checking and financial savings account.
The reason a checking account is important, is in order that kids can learn how to write checks, and have a designated spending account aside from a designated financial savings account.
Checking accounts are important for paying bills (be it online or by way of mail) and will give kids the opportunity to learn how to write checks. Even if check writing isn’t as prevalent as it as soon as was, it’s still important.
I used to be shopping sooner or later and realized I forgot my wallet, which had my credit cards and cash. I started to panic because I needed some food. Thankfully, I keep a few checks in the automotive and was able to save myself by writing a check… they still come in useful!
3. Charges & Minimal Balances
Some banks have fees 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 positive there is not a minimum balance or a very small ($10 or less) minimum balance.
Just as vital is how overdrafts are handled!
When I was in faculty, it by no means failed: my peers (who hadn’t realized the right way to balance an account) would routinely set off their overdraft protection and the hefty charges that went alongside with it.
They would look at their balance online and it would show $10. Then they’d check it once more a couple of days later and it was at $30.
It was the magical rising bank account; and they by no means wondered where the extra cash got here from. Till the top of the month once they had over $200 in overdraft protection fees!
I might recommend NOT getting overdraft protection and instead making darn sure they’ll balance their account (which we’ll cover in a future article).
4. What About a Debit Card?
Here’s my thoughts on kids having debit cards: it makes it a lot, much harder to balance the bank account while making it a lot easier to overspend and run into trouble.
Are ATM machines convenient? Yes, however I’ve never once used one in my whole life. Part of teaching kids life skills is to show them to be prepared. I keep an extra $10 in cash plus a couple of checks in my car. It wouldn’t trouble me if it acquired stolen.
If you’re determined that your kid gets a debit card, wait at the least six months after opening their account so they can learn “the old fashioned way” and understand how the debit card impacts their account once they really start using it.
5. Ought to I Be On The Account Too?
I think it’s an excellent idea so that you can be in your kid’s first account so you’ll be able to monitor their spending and make sure they don’t cause a train wreck.
It’s good to get statements so that you can use that as a learning experience to go over them with your kid and educate them methods to properly dispose of them (in a shredder) in order that they decrease their risk of identity theft.
Come up with a time frame or benchmarks till you pull your self off the account and let your kid take on the responsibility of a person account.
Opening a bank account is a large step into a new world for kids and it needs to be an important experience. Walk your kids via the setup and look for the learning opportunities along the way.
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