Teaching Teens about Checking Accounts

For some reason, many people act as if teaching teens about checking accounts is something that should be frowned upon, or at the very least verboten until they are closer to being of legal age. In all reality, waiting until the last minute to begin teaching a teen about the best way to handle a checking account is guaranteed to do at least one thing, and that is to make that teen's life more difficult than it needs to be. It's not all that difficult to teach this subject, and if you use the guidelines listed here then you should have no problem, and very little risk in doing the job.

• Know your teen. Considering that a checking account has the potential to allow a reckless teen get into a lot of financial trouble, you really need to know if your teen can handle having one. If your teen isn't that mature, then they can easily find themselves facing some overdraft fees.
• Start small. Before going out and opening a checking account with your teen, try doing some practice first. For example, if you give your teen an allowance, then have them pretend that you are a bank (usually this is frowned upon, but if done correctly it is an effective method of preparation). Have them keep track of what they are supposed to get and what they use, just as they would with a checking account. Anytime they want to purchase something, and don't have cash on hand, have them write out a "check" to receive funds from you. This will get them into the habit of keeping track of money that they spend, as well as knowing how to fill out a check.
• Get a real account. After your teen has shown that they can handle the practice checking accounts, look into getting a real one. Many local banks and credit unions offer products such as student checking accounts that are geared towards younger customers. However, if you can't find a bank that happens to have, or allow, a minor to open a checking account then you may want to look into opening a joint account with your teen.
• Keep a close eye on the account. Once you have the account open, be sure that you take the time to go over the statements with your teen. This will allow you and them both to see how the account is standing, and if there are any outstanding checks still circulating. In addition, it will allow you to point out spending habits, whether they are good or bad, and show the necessity of balancing the checkbook. One thing that you really should keep in mind, and be prepared for is that if there are any overdraft fees on this particular account, they should be handled by the teen themselves. Take the check book away until they are handled, but allow them to handle the consequences just like anyone else would have to.