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4 Steps to Helping Your Teen Open Their First Checking Account

From day one, we teach our kids everything they need to know. But there’s a big piece of the puzzle that’s been, for the most part, inadvertently left out: basic finances.

“From 25 years of helping people with their money, I’ve learned that most people are intimidated by finances and financial conversations,” says The Money Date Box founder Kathy Entwistle. And it’s no surprise: basic finances simply aren’t part of the standard curriculum in the United States. In fact, globally, the country ranked 14th in the world for basic financial skills, with only 57 percent of American adults considered financially literate, according to Standard & Poor’s Global Financial Literacy Survey. Australia, Canada, Denmark, Finland, Germany, Israel, the Netherlands, New Zealand, Norway, Sweden, and the United Kingdom all had higher financial literacy rates.

Unfortunately this lack of knowledge creates a rocky foundation that makes it easy to make financial missteps with real-world ramifications. It’s this basic lack of financial education that has led to inadequate household and retirement savings combined with high levels of credit card and student loan debt.

Thankfully, educators are coming around. As of 2020, 21 states now require that high schools teach financial literacy and 25 states require a high school economics course.

While that’s a great start, that still leaves millions of children without financial education. And even those who do receive instruction are getting just a broad introduction. Parents and caregivers have a very real responsibility to do their part to fill in the gaps.

A great way to do just that? Have open and honest conversations about your family’s finances and help your child manage their own money from a young age via their own checking and savings account. Here’s how:

Explore banking options

Today, there are many different options when it comes to banking. There are traditional brick and mortar banks, but there are also digital only options that are especially friendly towards young people and their technological savviness. These digital options can also be particularly helpful for minors, since they may not know where they plan to live in the future. You may be able to further cut down your list of potential options by looking for banks that offer some nice-to-haves like no monthly fees, free transfers from account to account, no ATM fees, and more.

Open a joint account

Since a teenager is still a minor, they’ll need an adult on the account. Usually, these types of joint accounts allow one parent and one child to be named, giving both parties full access to the funds until your child turns 18, at which point they can fully take over the account.

Set up a checking and a savings account

Establish good habits right from the start by establishing both types of accounts for your teen. This way, they can deposit some of their hard-earned money into a checking account, but reserve some for future use, developing a sort of emergency fund for themselves or saving for a particular reason like purchasing a car or paying for college. Having a savings account can also help protect your child from overdrafting their account if you set it up as the backup account when funds run low.

Avoid going on autopilot

Once you’ve set up the appropriate accounts for your teen, be sure to keep the lines of communication open. While you don’t want to hover over your child, it can be helpful to go over the monthly statement together. This way, you can talk about how much your child is spending and saving, what categories they’re spending the most in, and how they might be able to better budget in the future. It’s also a great way to ensure you catch any financial missteps—like missed credit card payments or overdraft fees before they become a problem and have potentially costly and life-altering ramifications like a wounded credit score.

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