Similar to that, there was a strong request for:
How to balance your budget and accounts
How to pay bills and write checks
also how to begin retirement saving
It appears that as a result, some of the concepts we teach children are lacking.
The best and most straightforward approach to begin the process of opening a bank account will be covered in this article, the first of a four-part series.
Even though it appears simple, there are a few inquiries that we'll cover in this post that many people never consider:
Savings or a checking account?
Exist fees or minimum balance requirements?
Do I also need a debit card?
Should my name be listed on the account alongside my child's?
Selecting a Bank
You should consider the following factors while choosing a bank:
The site should be close to your home, but it should also have enough branches for you to reach the bank in an emergency.
When I was a student at CU Boulder, I opened a credit union account with Elevations. Credit unions are incredibly fantastic for banking, and it was convenient. After I moved and graduated, there were no branches nearby, which was really inconvenient. Since US Bank is located in nearly every King Soopers, where I do my grocery shopping, I ultimately decided to create an account there.
Kids shouldn't have to go too far to go to the bank, therefore this is very crucial.
The same goes for the branch's accessibility. When I had a Norwest (now Wells Fargo) account, I recall how difficult it was to enter and exit the parking lot. I had a few close calls with traffic collisions and dreaded even going to the bank.
2. A savings or checking account
There should be a separate account used for investing and saving, as you'll discover in the forthcoming article on saving and budgeting.
That implies that having BOTH a checking and a savings account is crucial.
For youngsters to learn how to write checks and to have a defined spending account in addition to a specified savings account, a checking account is crucial.
Checking accounts are necessary for paying bills (whether online or by mail), and they also allow students the chance to practice writing checks. Check writing is still significant even though it isn't as common as it once was.
One day as I was shopping, I discovered I had left my wallet, which included my cash and credit cards, at home. I became anxious because I was starving. I was able to rescue myself by writing a check thanks to the fact that I always carry a few checks in the car. They are still useful!
3. Charges and Minimal Balances
While some banks charge for accounts, others do not. Naturally, since your child shouldn't have a sizable account, choose the alternative. Additionally, confirm that there isn't a minimum balance or one that is really low ($10 or less).
The management of overdrafts is equally crucial!
It never failed when I was in college: my friends (who hadn't learned how to balance an account) would frequently activate their overdraft protection, resulting in expensive fees.
When they checked their balance online, it showed $10. A few days later, they would check it once more, and the price was $30.
They were never curious about where the extra money came from because it was the enchanted expanding bank account. Until they had over $200 in overdraft protection fees at the end of the month!
I would advise against having overdraft protection and to make sure they can balance their account instead (this will be covered in a subsequent article).
4. How Do Debit Cards Work?
In my opinion, giving kids debit cards makes it much tougher to control the family's finances while also making it much simpler for them to overspend and get into problems.
Are ATMs easily accessible? Yes, but throughout my entire life, I have never used one. Teaching children to be prepared is a component of teaching them life skills. I keep several checks and an extra $10 in cash in my car. I wouldn't care if it was taken.
In order for your child to learn ""the old fashioned way"" and comprehend how the debit card will influence their account when they really start using it, wait at least six months after opening their account if you're set on giving them a debit card.
Should I Also Be On The Account?
I believe it's wise for you to have access to your child's first bank account so you can watch over their spending and ensure they don't cause a financial disaster.
It's wise to obtain statements so you may discuss them with your child and educate them how to properly discard them (in a shredder) in order to reduce their danger of identity theft.
Establish a deadline or set of criteria before you remove yourself from the account and give your child control of a separate account.
For children, opening a bank account is a significant step into a new world, and it should be a wonderful experience. Take your youngsters through the setup process while keeping an eye out for any teaching opportunities."""