The summer is often the first time young people get exposure to the workplace. More than 20 million Americans ages 16 to 24 had jobs last year, according to a 2014 report by the Department of Labor . The group is especially busy between April and July, when the school year is coming to an end and the opportunity to earn some money is atop young people's minds.
For parents of teenagers, this source of income may prompt them to open up a new savings or checking account. Helping your child understand how to save and spend money responsibly can be a valuable lesson they will carry with them for the rest of their lives. Here are some things to keep in mind when introducing teenagers to banking services:
There are Details in the Fine Print
When helping open a new account for your child, make sure you both read over all the documents presented. Unique types of accounts are available for people with different financial needs, so choosing the right plan is not as easy as it seems. Your customer service representative can also guide you in the direction for the best account. Find out if there is a minimum balance needed to maintain the account and what the policy on deposits are. If your child plans to use the money earned from the summer job for long-term savings, confirm the interest rate and see if there are penalties for withdrawing funds. Debit cards all have specific details and notices attached to them, so if a new card is a part of the account, have a bank employee go over all the specifics with you and your child.
Not many teenagers are used to the responsibility of managing a bank account. Going over the deposit and withdrawal process can be informative, so that everyone is on the same page regarding what money will go into the account, when it will be withdrawn and potential fees associated with overdrawing. This type of review will also help ensure that safety from crimes such as identity theft is also a top priority. A parent should monitor ATM codes and PINs of the child's new account, so that in case of emergency, such as lost or stolen cards, those accounts can be accessed. Teens are especially vulnerable to fraud and theft, making it especially important parents educate their working children on the importance of financial safety, according to a Fox Business story on bank accounts for that demographic .
Keep a Close Eye on it All
Parents face a tough dilemma when helping their teens open a bank account for the first time. On one hand, it is important to be sure they are safe and have a strong understanding of where their paycheck is going. On the other, a summer job is a signal of independence, so teenagers should be ready to take greater control of the banking process.
The evolution of online banking has allowed parents to balance this struggle. Teenagers are still able to deposit and spend their money as they so choose - or in the manner parents and children have agreed to - but the web gives adults the opportunity to monitor the situation without interference. Giving kids leeway is helpful, but parents should look over their child's finances on a monthly basis to ensure that everything is in order, according to Tanya Breeling, a vice president at Young Americans Center for Financial Education .
. Employment and Unemployment Among Youth Summary
. The Skinny on Checking Accounts for Teens
. 5 tips for opening a teen checking account