Teaching Your Teen Checking Account Basics
Teaching Your Teen Money Management: Checking Account Basics
Now that your teen has learned to save and build a budget, the next important step is learning how to manage a checking account. Your teen may already have a savings account, but federal law limits withdrawals from a savings account. A checking will allow them to make more transactions.
Research the Best Options
Help them choose the right checking account. Below are some things you can look for when selecting a checking account.
- Free. Look for a checking account that has no monthly service charge.
- Convenient services. Online banking, mobile banking, and alerts make it easier to manage the account.
- Location, location, location. When your teen gets older and goes off to college, you need an account that they can access anywhere around the country.
Even free checking accounts have some fees. When your teen opens an account, review the Fee Schedule with them. Explain to them the different fees and how to avoid them. Below are some of the most common fees that apply to a checking account.
Monthly service charges. If the checking account is not free, monthly service or maintenance fees may apply when the checking account does not maintain the required balance or direct deposits.
- TIP: Avoid these fees by choosing a free checking. Free checking means there is no monthly maintenance fee, no minimum balance requirements, and no direct deposit requirements.
Overdraft fees. These costly fees are charged when your teen tries to spend more money than is available in the account.
- TIP: Help your teen avoid these fees by keeping track of their account and checking their balance regularly. They may use a check register to record each transaction or prefer online and mobile services to keep track of their spending and available balance.
ATM fees. These fees are charged when using another bank's or credit union's ATM.
- TIP: Before opening the checking account, ask the representative about which ATMs in our network. Use ATMs within the network to avoid being charged. You may also find other convenient ways to get cash, such as free shared branch services offered by some credit unions, or requesting cash back with debit card purchases.
Managing a Checking Account
Step 1: Show your teen how to keep a record of their deposits and withdrawals and calculate the balance. They can do this in a good old-fashioned transaction register booklet. Write the transaction in the booklet right away or teach them to save receipts from their transactions and record them in the transaction register when they get home. They can avoid the paper by using a transaction register app on their phone.
Step 2: Every few days, review the account with them using online or mobile banking. Compare this to what is in the transaction register. When doing this your teen may notice that the balance in Online Banking does not always reflect what is available in the transaction register because of debit card holds, outstanding checks, scheduled recurring payments, tips, and holds on checks they have deposited.
Step 3: When their monthly statement arrives, sit down and review the transactions. Use the monthly statement to update their budget so they can see how much they really spend. If you find any suspicious transactions, help your teen report them immediately.