7 Reasons a Savings Account is Important for Teens
Why A Savings Account Is Important for Teens
The importance of saving money is no secret, but it’s never too early to start. Savings accounts for children, teens, and students have become more and more common, as they’re a great way to invest for the future and teach children financial responsibilities. While it might seem silly to open a bank account for a young person not yet in the workforce, there are a wealth of benefits to introducing your child to their own bank account and teaching them to manage their own budget. With adult life right around the corner, helping your child learn how to better manage and save their money can be extremely beneficial for them later on.
Ideas for Teens To Earn Money
Before teaching children and teens how to save their money, first, it’s important to help them understand how they can earn it. It can be difficult for young persons who are not yet in the workforce to earn their own money, but teens and tweens have many options for earning some extra cash. If you have not already set up an allowance system for your child, now is a great time to do so. Allowances can be implemented at any age, which is a great way to introduce your child to finances, responsibility, and the consequences of poor financial decision-making. Allowances can help provide a child with structure, and when tied to chores, it helps a child understand the correlation between work and play.
Additionally, allowances can be a great reward for maintaining good grades in school; good grades require hard work from students and should be recognized and rewarded. This gives your child or teen an incentive to work harder and earn more money. Once your child is old enough and is ready to earn money outside the home, help them find an age-appropriate job suitable for them. For older children and tweens, babysitting or pet sitting can be great opportunities. Once in their teenage years, many more options become available through part time or summer jobs in food service, retail, and more. Even that $20 that grandma sent for their birthday can be used to help your child understand the value of saving.
Banking Fees and Requirements
Considering it’s possible to open a savings account for a baby, age is not a huge hindrance on opening a savings account for a teen. It can be especially easy to open an account for a student, as many banks now offer students bank accounts or easy savings account terms. While it can be a fairly simple process, it’s important to read and research what is required to open a savings account. There should be no limits on the number of small deposits allowed, given that your child will likely be depositing in more frequent, smaller quantities. And, as is the case with most contractual obligations, it’s consequential to read all the fine print to avoid surprise inactive account fees.
Time and Interest
The point of a savings account is to set aside money for a long time, and eventually go towards such things as college funds, large purchases, or other set goals. While the relatively low interest rate of savings accounts depends on economic conditions and your bank’s desire to compete with other banks, earning a little bit of interest is a great way to show kids how saving for a rainy day, can actually help their money grow. Perhaps more importantly, although the savings account interest rate may sometimes not even match inflation, your risk of financial loss with a savings account is virtually non-existent, keeping your money safe over time.
Financial Responsibility and Good Savings Habits
Perhaps one of the biggest advantages to opening a savings account for your child (other than saving money) is helping your child’s financial literacy. It’s a common complaint regarding our current schooling system – no one is teaching our kids how to open a bank account, balance a checkbook, or various other responsibilities that coincide with adult life. Introducing these concepts early-on to your child can greatly improve their understanding and practice of financial responsibility. The value of the dollar can be kind of abstract for a child, having nearly everything provided for them for the majority of their young lives. Giving your child an outlet to practice their own budgeting and saving can be beneficial for many reasons.
Children and teens thrive best when their lives have structure, and while it may seem miniscule, having your child open their own bank account can greatly promote productive structure within their life. The obvious benefit of a savings account is that it can help your child practice good spending habits, and how saving money, rather than frivolous spending, will help them achieve certain goals. As your child or teen gets older, it’s important for them to be able to recognize and differentiate financial necessities oppose to nonessential spending. Learning about these financial responsibilities can help children and teenagers gain perspective and become more compassionate, empathetic young people by learning how financial resources are tied to what people have and don’t have.
The Desire to Succeed and Be Independent
Children want to be successful, and while success doesn’t present itself through a savings account, being able to manage your own finances and see a testament to the work, time, and money that a child or teen worked hard to cultivate can be very rewarding.
As a parent, it’s important to recognize the freedom that financial independence gives your child. When children and teens are able to manage their own finances, that “financial leverage” found in a parent-child relationship dissipates a bit. Not to confuse this as negative – it’s very important for children to learn to be self-sufficient. When children and teenagers don’t learn how to manage a budget and save their money, they can become young adults with little financial knowledge or ability to support themselves. Teaching children early and letting them practice saving their own money allows them to become more independent, self-sustaining, and self-reliant, young persons.
At Citizens State Bank, we will be happy to discuss our accounts specifically for kids, students, and teenagers. Give us a call today, and together we can help your child start saving for their future.