My son is 11 years old, and he’s had a savings account since he was five or so. As he grows, though, I’ve started thinking about the fact that he should probably have a checking account fairly soon. I was 12 or 13 when my mom opened a joint checking account with me, and the habits I developed under my mom’s watchful eye have benefitted me for nearly two decades.
Now I’m trying to decide when I should help my son open a checking account. In a world where money matters so much, it makes sense to provide my son with as much practice as possible. Now is a great time for him to make money mistakes because the consequences aren’t as severe.
As I ponder whether or not he is truly ready to take this step, here are some of the things I am considering:
Will the Bank Allow It?
First of all, it’s important to understand the laws in your state, and the policies of your bank. While it’s usually fairly easy to open a savings account with your child, a checking account might be a different story. A bank is likely to be more comfortable with your child managing an account that is mostly deposit-only. Few children come calling to withdraw money from a savings account. A checking account, which can result in overdrafts and other problems, is a different story. Call your bank and find out whether or not you can open a checking account with your child.
Also, realize that, just because you can open an account, it doesn’t mean that your child can have a debit card. In some cases, your child won’t receive a debit card until he or she is 16 — or even 18. Again, it’s important that you contact the bank and find out what policies govern checking accounts for minors in your state, and for the bank’s policies.
Has Your Child Shown Responsibility?
Next, you need to look at your child’s individual habits and level of responsibility. How has your son managed his or her allowance up to this point? Has your child had practice at making spending decisions, and saving for the future? Does he or she understand that sometimes it’s important to delay gratification and save up for what really matters?
My son gives 10 percent of his allowance to our church, and he saves 20 percent of it for long-term goals, such as college. The rest of it is his to manage as he sees fit. So far, he has done a pretty good job. He doesn’t even consider skimping on the savings and donations. It’s become second-nature to him to engage in these habits.
One of the things I like about how my son manages money is that he often sets goals for his money. He does make the occasional impulse purchase (who doesn’t?), but he often thinks ahead to what he wants to buy, and then sets aside money for short-term goals. Right now, he’s saving up so that he has spending money for our spring break trip coming up in April. This thoughtfulness is a good indication that he might be able to handle a checking account (assuming the bank is on board).
While my son sometimes needs prompting to help him remember what he’s doing with his money, for the most part he thinks about what he’s doing. When he wants to buy something on impulse, sometimes I have to talk to him about it. I ask him questions like:
- Do you have the money for this?
- Will it set you back in your goal to buy X?
- What will you do with this item?
No child is going to think about these things entirely on his or her own, so the prompts are important. The fact that he thinks it through when I offer the prompts indicates that he might be ready for a checking account.
Is Your Child Willing to Do What It Takes?
Managing a checking account is a little more involved than managing a savings account. Before you open a checking account with your child, it’s a good idea to have a discussion about what the whole process entails. Let your child know that he or she is expected to track spending, and to reconcile the account each month.
Have your child watch you take care of these tasks. My son sees that I enter receipts into my computer software by hand once or twice a week. He has also watched me reconcile my accounts (credit cards, checking, etc.), so he knows what I do to make sure that everything is in order. Make sure your child is willing to carve out the time for proper management. (One way to encourage proper account tracking and reconciliation is to get a software program. Many kids like anything that allows them more time on the computer.) If he or she is involved with music practice, and does homework with a minimum of fuss, this is usually a good sign that your child can make time management choices — even if he or she needs the occasional reminder to stay on track.
Helping your child open a checking account is a big step. It can help him or her learn how to better manage money, and prepare for the future. However, you have to realize that your child is still learning and that you will still have to look over his or her shoulder to prevent big mistakes. This can include making sure the bank doesn’t allow overdrafts, and keeping tabs on the account.
As a joint account holder, you have the right to put limits on the account, and even receive your own separate statements. This is good practice so that you can stay informed of what’s going on, and so that you can talk about your child’s choices and help him or her continue learning. Even though you want your child to learn to manage the checking account, you still need to be there and provide guidance. Remember that you are still the parent.