Raise a Financially Responsible Teen


In our June article we talked about whether or not parents should allow their college aged children to have their own credit cards. This time we will continue our teen and money topic. As parents we want to raise financially responsible children. If our last article is geared toward older teens, in this one we will show parents a good way to allow their younger teens a real-life chance of managing their own money.

Have you thought about allowing your teens to have their own bank accounts? Some banks offer kids or teen checking/savings account designed for their young customers.

In our family, our two teenage daughters do some basic chores, not expecting getting paid. Purposefully, my husband and I asked them to do a few extra household chores in exchange for allowance money. They are getting paid twice a month. For this reason, my husband and I set higher standards of the quality of the job they do than the basic chores they are expected to do. At the same time, I opened teen savings account for them at a bank so that their “wage” goes to the bank accounts in their names. We also set up accounts for them at Mint.com, an online personal finance management website and linked their bank accounts with their Mint.com accounts.

Part of our strategies of teaching them financial responsibility is to give our daughters great freedom to spend their money however they want unless the purchases are explicitly banned by us. In the past, when they go out with friends to places, like mall, they would ask us for some money. Since having their own bank accounts, they don’t have to argue how much money they need to bring with them anymore. They can just take their bank debit cards with them and go.

As expected, during the first couple of months they managed their money poorly. They made a few big purchases and their bank accounts depleted quickly. Then, they have to wait for their next “pay” deposit even if they see something they really want to have. After a while they started to learn to budget and save for “big ticket” items. And they also learnt to postpone consumption so that they leave some money in the bank in case of “unexpected” needs. They are learning these essential personal finance management skills all by themselves without me or their dad to sit down and talk them into doing so.

One of the features of these teen bank accounts is that parent can be a co-owner. This allows parents to monitor and supervise while giving their teens freedom to manage their money. This should assuage concerns of some wary parents who want some control on their kids’ spending.

For interested parents, I will compare some essential features of the checking accounts three banks offer for their teen customers. If you do not bank with any of them, call your own bank and ask them if they offer such accounts.

Capital One Chase Bank
Teen Checking Account
and Interest Rates
yes Yes
Minimum to Open or Keep Call
to verify
$0 Call
to verify
Monthly Fees $0
if under 24
$0 $0
if under 18
Allow Parental Supervision yes yes yes
Debit Card yes yes yes

(Sources: official websites of BoA, Capital One Online Bank and Chase Bank)

The information in the table above gives you a glimpse of what the banking products for teens are out there. Don’t agonize about which one to choose, your goal is to let your teens learn to manage their money responsibly. Good luck!