How to Open a Savings Account for a Teenager
You may have taught your child how to spend wisely when you go shopping and how to save regularly through a piggy bank. Now that your child is a teenager, he or she has to learn new money skills like how to earn money and how to manage it well. It's now time to teach your adolescent how to use a bank and open a savings account.
While your teen may be enthused about earning money from work, you also have to teach him or her not to spend it all. Whether your teenager is mowing loans, babysitting or working at McDonald's, saving is an important lesson in financial management.
When introducing your child to the world of banking, you will need to consider fees and requirements, the location of the bank, the age of teen to open a savings account, and earning interest on a savings account.
Fees and Requirements
The first place to check is your own bank. You are familiar with its policies and you can introduce your child to the people you know there. First, consider fees. If banking fees are too high, then the next place to look is credit unions. Since they are owned by members, they have lower fees. Another place to look is online banks.
Next, consider requirements. Your teenager needs an account with no required minimum balance and no monthly account maintenance fees. There should also be no limits on the number of small deposits allowed. Finally, read the small print to avoid inactive account charge fees.
Location of the Bank
You should consider opening a savings account for your teen at a bank or credit union that is located near where you live or near where you regularly travel. You could find a bank in your local supermarket or superstore, one located near the house, or one near the school. Apart from saving money in gas expenses, a convenient location will make it more likely that your teenager will visit the bank to make deposits.
Minimum Age to Open a Savings Account
When you consider that parents can open up a savings account for a baby then age is not really a restriction to open a savings account for teens. However, requirements for savings account vary. You have to find one that works for your teenager’s earning, spending, and saving patterns.
Earning Interest on Savings Accounts
If the idea of a savings account is to set aside money for a long time, for instance, college expenses, then it is best to find a savings account that can keep reasonable pace with the rate of inflation. There is no point in saving money for years only to find that the money has lost most of its purchasing power.
Alternatively, if your teenager is only looking for a temporary place to set aside money, then the inflation rate is not a decisive factor when considering interest rates. Either way, you should review the rate of interest that the savings account will pay before you open an account.
After opening a savings account for your teenager, they may want to open a checking account for their day to day spending money. To get started, review the banks that offer checking accounts for kids. If your teen is planning to open a checking account, it might be a good idea to open the savings account and checking account at the same bank.