Teenagers, am I right? They’re so grown up and they know everything — that is everything except revolving credit card debt, skyrocketing cable bills, and applying for loans. These are the kinds of things that shouldn’t be learned by trial and error. Instead, start giving them a strong foundation that they can use in any situation by opening a checking and savings account in their name.
Getting a grasp on their personal finances at an early age is so beneficial in the long run. It instills a deeper appreciation of money and financial literacy. They’ll learn about how to make their money work for them with things like CDs, money market accounts, and old-fashioned, interest-bearing savings — things that will actually generate returns on their investment.
Typically 16-year-olds are eager to get that first job. Not only can they use their new account to deposit their pay, they can have a percentage that is automatically deposited into savings. This can be done when they fill out their direct deposit information, or in transfers between their bank accounts. Ideally, at that age, 75% could realistically be swept into savings. Some other ideas include:
- Empowering them to use their money to achieve long-term goals.
- Teaching them about the joy of monthly recurring charges by having them pay their own gaming subscriptions.
- Teaching them Quicken, Mint, or other accounting apps.
- Encouraging a “rainy day” fund or other goal.
- Above all, they want to be independent — so play to that!
We recommend that all bank account holders (even you) reconcile, or balance, everything that passes through their accounts at least once a month. That is something that Judith Heft & Associates can teach to your adorable adolescent. There are tremendous benefits when young people form a financial or banking relationship with someone other than their parents; someone who becomes their individualized, financial cheerleader.
Starting a bank account early in a teenager’s financial journey is the first step to nurturing life-long habits that help secure a strong financial future. To learn more about our education process, contact us.