As your kids grow up and start to get more independent, parents have a lot of questions to ask themselves. One of those questions revolves around money and the right time to open a teen savings account for your teenagers.
Knowing when to introduce your kids to financial responsibility isn’t easy, but with a few simple tips you can determine if this is the best time for your teen to have their own checking account, savings account, or both.
Are they past the piggy-bank stage?
Most of the money your kids earn early in life goes straight into a piggy bank, jar, or other container that sits on their dresser. When they want to buy something, they have access to that money whenever they need it.
Like with clothes, shoes, or mom’s hugs, though, kids grow out of things. Once they’re past the piggy-bank stage, it’s time for a teen savings account. This gives them a secure place to place their money, and they’ll earn interest.
According to The New York Times, “Children vary in the speed at which they learn to handle money responsibly . . . Generally, however, it is better to let them make mistakes under a parent’s tutelage . . . than to wait until they are on their own.”
Once your kids start earning more money, it’s time to open an account for them so they can learn the lessons that accompany money management.
Are they independent?
If your kids are more independent than most at their age, then giving them some responsibility can help them feel like they’re succeeding at a higher level than their peers. From a self-esteem point of view, that’s an incredibly valuable investment.
One author for The Simple Dollar wrote that, “When I saw I could make my checking account climb dramatically through my own efforts, I wanted to grow it as quickly as I could. By the end of high school, I already calculated what I needed to ‘retire’ and set goals for how fast I could be financially free.”
Give them financial freedom
One thing most parents have in common is a desire to give their children a better life, and better opportunities, than they had at their kids’ age.
Part of achieving that goal is helping your kids get financial freedom as early as possible in life. Giving them the ability to move out after high school and never have to ask you for money, or if they can live in the basement again, is the biggest parenting win you can get with millennials.
It also sets up your kids to be financially successful later in life, but much earlier than their peers.
It may feel like a big leap into the unknown, but giving your kids the financial freedom of a teen savings account early on in life can, and will, make a difference in how their life turns out.