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Teen Banking accounts

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My 16yo daughter just got a job at our local library as a youth page.  She is super excited, but needs an account for her direct deposit.  I don’t really want it going into our checking account. Do those of you whose teens have jobs get them a checking or a savings account?  How would I decide?  She doesn’t really have any expenses that she needs to be paying right now.  As a side question, do any of your teens with earned income open a Roth IRA?  Thanks in advice for any advice!

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When DD17 got a part-time job, we opened an account for her at the same credit union where we bank. We were able to link her account to ours online, so that we can move money easily from our account to hers, if needed. She did get a checking account, because that is what her debit card is linked to, but she also has a savings account. I think her paycheck goes into her savings account, but she can move some money easily to checking if needed. She has written a couple of checks for things, but I think only one or two over the time she has had her account.

We opened savings accounts for our three younger teens this summer. They don't have jobs yet and don't need debit cards, so we didn't add checking accounts for them yet.

We are planning to have DD17 open a Roth IRA through the credit union, as well, but we have not done it yet. Her contributions will not be very significant, but we think it's good for her to start young. We may match her contributions ourselves in some way, to give her a head start on her long-term savings.

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My dd has just a savings account for now, I am on it as well. 

I plan to help her open a Roth IRA before the end of the year.

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Is she good with handling money?

You can open a joint savings/checking account with her.  With my son's direct deposit I could specify that x amount went into the checking each paycheck and the balance went into the saving.  He then had a debit card for the checking and is learning to monitor his account online, use the debit card, keep track of balances (and pending transactions).  That is a very good thing for a teen to learn when the stakes aren't very high.

I am a big believer in having the teen start taking over part of their expenses when they have. A job .  You can decide which ones/how much but it teaches responsibility and is very empowering.  Then again, I started paying for much of my expenses by age 12 (poor single parent home) and by 16 was paying for the car I bought, my own Insurance, gas, repairs, clothing, entertainment, etc 

I would absolutely start a ROTH IRA...I suggest Vanguard for super low fees and easy to understand.  Even a small amount now will really add up over the years.  That is one thing I was never taught and so wish I had done 35 years earlier.

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I got my kids checking accounts even before they had jobs so that they could gave debit cards and pay for stuff without me squats having be there.  My oldest still has a joint savings with me, my middle has s checking account with me and my youngest has both with me.

Since mine are all grown ups now, they all have there own separate accounts too but this is still the easiest way for us to pay each other for expenses.

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Some banks have special teen accounts that give you some privileges to check their balance and get notifications if they overdraw. That's what we did for ds's account. It's through Capital One, but lots of other banks had similar "teen" accounts. They weren't more expensive or more fees - just slightly different set up. Ds was fine with us doing it this way.

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I'm on my third teen, and at about age 14 or 15, they've all gotten checking accounts linked to my checking account.  This means there is no fee, I can easily move money into their account from mine (or, theoretically, from theirs to mine) and I can monitor the activity because it shows up on the same log-in as my own accounts.  By far the easiest experience was with USAA, so if you happen to have an account there, I would go with them.  Our local national bank (SunTrust) requires an in-person visit and is horrible to deal with.  My local-local bank wouldn't let my son open an account at 15; he had to be 16 for no reason that they could explain.  (I seem to have a lot of banks.)

We have promised our kids that we will make Roth IRA contributions for them for about the first five years that they are eligible.  I'm on Year 3 with my oldest.  I remind her every year when I make the deposit to think nice things about me when she retires a millionaire. 

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DD15 has had teen/child, no fee, checking and savings accounts for a few years now for when she started babysitting.  It is through the bank we use so we are able to transfer funds back and forth between hers and our accounts.  I believe we are also on her account, but she primarily deals with it, even getting her own paper monthly bank statement in the mail.  When she gets a regular paycheck, we'll recommend she deposit it in her savings.  She has a debit card that she uses attached to her checking.  She's also able to transfer funds back and forth online btwn. savings/checking.  I think this makes her feel very mature with a strong sense of pride and ownership.  She's super reliable and honest with her funds, and we both agree it's fun to see money "grow."

More than you asked for, but we expect her to put at least 30% towards savings, 10% giving/tithe, 60% spending.  In reality, she saves so much more since she has very little in expenses.  These are her baselines allowing for the "freedom" to give to causes she's interested in.  

We have a (eta: Vanguard) targeted 30(?) yr mutual fund in our name that we add to for all our kids for them to use for major adult purchases, ie. education, housing, cars, something like that.  So whenever the grandparents give a bit of cash for savings, it goes there.

Not sure what we'll advise once she's gotten enough in savings for an IRA or the like--must investigate our options...

DD13 is soon to get her checking/savings accounts.  She's accumulated enough cash through babysitting that I don't want it sitting around the house.  Her twin DS13 doesn't have enough of a steady income yet so he'll have to wait.

Edited by ChrisB
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Even without having a job I opened a joint checking and joint savings account for my then 14 yo.   At a bank (USAA as with the person above me) where I already had an account.  It was designated a “youth” account and had no minimum balance requirements. He can use debit card, but not write checks till he’s 18.  

I also had my son open small accounts at a local bank (again joint because  under 18 he couldn’t have his own) to get practice at working with a bank himself. 

 

 

I think starting an IRA as young as possible sounds like an excellent idea.

 

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My kids have In Trust For (or ITF) accounts since they were babies. It’s where all the birthday cash gifts goes. The bank says that I could technically close their account before they reach 18 and keep the $$ for them because of FAFSA.

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Our girls got paying jobs at 15 and 16. Our regular bank required dh (who took her) to link the 16yo’s account to his. They would not give the 15yo an account.  Our mortgage bank across the street did give her an account that isn’t directly linked to our account, but it is tied to dh’s SS#.

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Ours have chequing accounts, as those are no-fee. They can manage their own finances: receive their allowance via e-transfer and get paid for lawn mowing, and use their debit cards, etc.

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we have a checking/saving account set up for dudeling.  he doesn't write checks, he does have a debit card.  it gives him control of his money.   

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I open a children's saving account for all my children when they are small. It goes until they are 18 , then rolls over into an ordinary saving account.  Up until the age of 13 they cannot withdraw money unless they have written consent every time from me. after 13 they need to accompany me to the bank, talk to the teller and fill in some paperwork . then they could have either/or both  card, or their bank account have internet access.  Seeing as my kids go thought a stage of not wanting to talk to people unnecessarily they  never do this and don't withdraw money until they are 18

Here  If they are a students there are no fees.

here  in Australia  checks are something that is almost extinct. We haven't had a check book for over 10 years.

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We opened savings accounts for both of our boys shortly after they were born, and opened checking accounts/got them debit cards when they were around 13 or 14. To begin with the accounts were custodial (in my name as well as theirs), and then once they were 18 I think the credit union transitioned them to regular accounts. But I'm not sure about that--I've never bothered to check. Our boys have not had Roth accounts, but DS23 opened a stock investment account with TD Ameritrade when he was about 12 or 13. That had to be some sort of custodial thing, too. I don't remember the details because DH helped him set it up.

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I helped both boys open checking/debit card accounts and a savings account when they were about 16. At my bank.   I had to be on the account when they were underage...and I set them up so that they couldn't over draw.  Neither have ever written an actual check.  Dss18 has had two jobs, both of which were direct deposit.  Ds19 has had the same job for 3 years but he gets a physical check.  Also xh deposits money directly to ds for school or whatever.  And Dh and I can transfer money back and forth to the boys easily.  

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We opened joint checking accounts for each of our kids right before we went on a trip.  They were about 3 - 9 years old, but our bank was giving away free suitcases for each new account!  😄  So each child's account was under my husband's and my names, and their names.  (Their name was listed first, but we were required to have ours on there as well since they were so young.)  Those accounts sat mainly unused until the kids were in their teens (with just a minimal amount of money in them).

In retrospect, having our names on their accounts too was really, really handy.  Once they were away at college or studying/traveling/living abroad, we could easily help them out with all sorts of money transactions/needs/emergencies simply because our names were on their accounts too.  (And of course we could transfer money back and forth so easily since our names were on all of them.)  

They preferred checking vs. savings even as teens because now and then there were times when they needed a check for something.  

We treated their accounts as 100% theirs, even though our names were on them.  So, once they reached a certain age and actually began putting money into them and using them, it was their responsibility to manage them responsibly.  

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We opened bank accounts for the kids when they were in pre-school. They are connected to our account now, but will separate after they turn 18. 

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My DS got a checking account with debit card when he started his first job at 15.  He is totally responsible for managing it on his own. I have no idea how much money he has at any one time.

that account is separate from his long term savings so that he can’t easily get money from savings (parents savings for him)

 

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My 13 year old just opened a checking and a savings account. If I understood correctly, he can't take any money out of the savings account. But he has a debit card he can use for the checking account. He puts half the money he earns into savings and the other half into checking. It is linked to my account so it's easy for me to transfer money to his accounts. (He mows lawns and sometimes gets paid in cash or to my venmo account, so then I transfer the money to him) He is a really responsible kid and so far having his account has been really convenient and I know he's not spending his savings.

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4 hours ago, Pawz4me said:

We opened savings accounts for both of our boys shortly after they were born, and opened checking accounts/got them debit cards when they were around 13 or 14. To begin with the accounts were custodial (in my name as well as theirs), and then once they were 18 I think the credit union transitioned them to regular accounts. But I'm not sure about that--I've never bothered to check. Our boys have not had Roth accounts, but DS23 opened a stock investment account with TD Ameritrade when he was about 12 or 13. That had to be some sort of custodial thing, too. I don't remember the details because DH helped him set it up.

This is what we've done. 

You can usually do a secured credit card in their name if you want through credit unions for like $400 or something for a card in their own account.

In our case, we just added her as an authorized user on our cc accounts, and that goes for building her credit too. I can't remember the age minimum- I think it's like 13 and you can add them as an AU. Doing this would be highly dependent on the kid and their responsibility level, as your limit is their limit at that point. 

We like having her use a cc and not a debit as day to day for charges, just because the compromise risk is so much higher with debit cards, whereas with a CC it's pretty easy (although a hassle) to deal with the fraud. Whereas with a debit, they can wipe out your account and my understanding from people posting here is it can take weeks to be reimbursed. 

Edited by Æthelthryth the Texan
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Adding, one of the reasons i push to open a savings account in addition to the checking is so that she sees how much she can actually spend vs. strictly savings.  If she saw the whole lump sum in checking, she'd feel like it was available to spend.  I'm very similar---maybe most people are?

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1 hour ago, Danae said:

We opened bank accounts for the kids when they were in pre-school. They are connected to our account now, but will separate after they turn 18. 

We did too.  My kids get an allowance and they are required to save a portion of it, so we regularly take them to the bank to deposit some of their money.

 

My oldest got her first checking account.....I want to say she was 14ish.  She started working at 13, but it was at my sister's family business and it was really just cash for dishwashing.  Once she was old enough to get a work permit, she was working regular hours and hand regular payroll, so we opened her a student checking account at that point.  So she was either 14 or 15.   Her student account remained a student account until she graduated college, then it automatically switched over to a regular account.  

All our kids have my name as the second person on their account.  As minors, that is what the bank requires.  DD23 still maintains me as a second person on her account, but I don't check her account at all.  It does pop up on the home page when I log into the bank, but I generally ignore it.  The only time I checked it was when I logged in an suddenly several thousand dollars was gone.  So yeah, I did check that to make sure she hadn't been hacked or something.  (she hadn't, it was a specific payment to her school that she had been saving for.)  

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Certainly check out local credit unions.  Ours offers no fee accounts with a $5 minimum.  I love that online I can transfer money between accounts, etc.

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