As a teenager, you are not yet expected to be an earning member of your family. You might be getting pocket money to cover your peripheral expenses for the week or month, but your relationship with money is fairly distant.
You probably do not know exactly how money is earned, how banks work, and how you can turn money into greater volumes of money.
In addition to this, teenagers can often be impatient and instinctive. It is due to this reason that parents can be averse to handing even the shortest of purse strings to them since the chance of an unwise financial decision increases.
However, what it is important to understand is that putting teenagers in charge of money can also have benefits in the long run. This is especially true if you provide your teenager with a no minimum balance account. Let us look at some of these possible advantages.
1. Added Responsibility
Among the most regular complaints that parents have against their children is that they are just not responsible enough. They are more interested in splurging hard-earned money than spending it judiciously and have no interest in savings of any sort.
What’s more, these complaints might actually be justified. Teenagers just don’t have the kind of experience with money to be interested in saving up. For them, money might just be an instrument that gets them their favorite concert tickets, devices, and meals.
Providing teenagers access to a no minimum balance account hands them access to their own finances.
As a parent, you only need to add a fixed amount of money to their account every week or month. Establish a rule that no further funds will be provided. This makes kids responsible for their spending and teaches them to do so prudently.
2. Habits For The Long Term
Several adults, when they get access to their first account, are prone to making mistakes, whether related to banking or their personal finance. No books or articles can save you from making these mistakes; rather, experience is the best teacher in this regard.
This experience is exactly what you can inculcate in your teenager when you provide them with a bank account.
The longer your teenager engages with a bank and has experience in handling a bank account, the less the likelihood of any grave mistakes being made later in life. This way, your teenager becomes significantly more financially prudent even before starting to earn.
3. Tracking Expenses
In general, the way teenagers spend money is by using their pocket money, which may be cash or money added to a mobile wallet. Their spending can be miscellaneous and, given how it is spent, extremely difficult to keep track of.
By not keeping track of where and how they are spending their pocket money, teenagers can often treat their pocket money like a bottomless pit. When you provide an account to your teenager, you also provide them with a way to track their expenses.
Always go through the reviews of the bank you open an account in, whether it is Chase or synchrony bank reviews, to make sure that they do provide this capability.
This will also allow your teenagers to assess the type of things they are spending most on and adjust their future spending accordingly.
4. Opportunity Cost
The concept of opportunity cost is not one that is taught in schools. However, it is one of the most significant learnings one can get in life, especially when it comes to matters of personal finance.
Providing your teenagers with a no minimum balance account provides them with this teaching. They learn to prioritize their spending and the fact that saving up can actually help them purchase better stuff in the future.
Best of all, teenagers with a no minimum balance account can learn the opportunity cost of giving up on small things to achieve a big goal.
5. No Obligations
Among the major obligations that banks hold you to and that prevent parents from opening a bank account for their teenager is that you need to have a minimum balance.
This minimum balance can often be greater than the amount of money that parents would trust their teenagers with. This is where the advantage of a no minimum balance account comes in.
The account can potentially be kept at zero balance for weeks at a time, making it fit for teenagers who only have a maximum of a few hundred dollars at a time.
The amount of money that teenagers have in their accounts is unlikely to make them financially independent. However, it gradually teaches them to take control of their own lives.
Having a disposable fund is essential in developing a feeling of independence, which also makes one more responsible in the future. When teenagers finally start earning later in life, they will have a better grasp over both earning and saving for the bad day.
In the future, if it comes to emergency spending such as dental surgery, they will not have to go about looking for dental financing options but will rather be able to tap into their own savings.
7. Banking Fundamentals
For a newbie, concepts of banking, even those as simple as compound interest, can be hard to learn. After you open your first account, it can be months before you finally get accustomed to these terms and understand the impact that they have on your finances.
The earlier you are able to understand banking fundamentals, the better it is for you, and this is what a bank account helps a teenager with. Though interests and earnings will typically be low, teenagers will be able to understand how to deal with banks when they grow up.
Teenagers can be irresponsible and financially imprudent, and the best way to cure them of these issues is to hand the purse strings over to them.
The above points are only a few benefits of doing so – open a no minimum balance account for your child, and you shall feel a perceivable change in their attitude!