Back to school for teens and young adults – whether they’re starting high school, a first job, or heading off to college – can be a great time to set them on a path to financial independence. Money management, including budgeting, spending, and saving is one of the most important tools that parents can teach their children from an early age.
Taking advantage of online learning tools through a credit union or bank can help students start managing their finances the right way.
•Student Checking Accounts: Many financial institutions offer a student-focused checking account with a debit card. Parents are also on the account, and there is typically no minimum balance, no ATM fees, and they offer easy mobile and online access. A benefit of a debit card is that parents and the student can work together to determine a weekly or monthly budget for spending. The account can be set up so that when the money is gone, the card will be declined at the point of sale. This will limit overspending and teach budgeting.
•Credit Cards: For college-aged students, a credit card account in their name can be set up with the parent also as an account owner. This helps them build credit and also gives them a way to access emergency funds if needed – all under a parent’s watchful eye.
•Financial Tools: Some credit unions and banks offer financial education tools on their websites to help students learn how to manage their money. Sit down with your student and review them together and share your experience with credit and a savings goal you might have too.
High School Readiness
“High school is the time when many teenagers will get their first job and begin earning money. If your teen doesn’t already have a checking and savings account, it’s a good time to set them up,” says Becky Stembel, Bellco Chief Member Experience Officer. “Look for a bank or credit union that offers youth accounts that don’t require minimum balances and don’t charge ATM fees. Make sure you cover a few reminders with your teen if they don’t have a lot of experience with deposit accounts.”
For any teen who’ll be going to college and leaving home for the first time, there are so many things to think and worry about: packing, roommates, grades, juggling school with other activities. And for parents, the list of worries is endless. A big concern can be how their young adult will manage their finances while away from home. Depending on whether the teen is going to school in Colorado or in another state, the following are some key questions to ask: Can my teen stay with their existing financial institution or do we need to find a new one? Should they have a credit card or just a debit card? Should I, as a parent, have access to my teen’s bank accounts to monitor account balances and spending?
“You’ll want a checking or savings account where the parent can monitor the student’s account balances to help provide some peace of mind. Make sure you discuss spending and a monthly budget for non-school related expenses (entertainment, clothing, food, etc.) with your teen before they leave home to avoid big spending surprises,” says Stembel. “If you’re planning to provide your college student with a credit card, identify one geared for students that has a low interest rate and a spending limit of $500 to $1,000.”
First Job Readiness
For many young Americans, opening a checking account is a financial rite of passage into adulthood. Earning that first paycheck or even just preparing to move out of their parents’ home causes teens across the country to make their first meaningful financial decision—where to open that checking account. But if you’re like a lot of Americans, you don’t give much thought to your checking account as the years go by.
“In reality, the checking account that served you so well in your younger years may not be your best bet today. The good news is that with a little research (make sure you check out the benefits of credit unions), you may be able to save significant money with interest-earning checking accounts that cut out unnecessary monthly charges and earn higher returns on your balance,” said Stembel