Is Your Child Prepared For Electronic Banking?

TEACH THEM EARLY

Have you opened a checking or savings accounts for your teen child yet? Opening a checking and savings account can be a great way to teach a child the basics of transactional banking. These days, most large banks (and many smaller ones, I’m sure) offer banking services for teens. Opening an account for your child while a Junior or Senior in high school can offer multiple learning experiences for both parents and children.

Don’t assume that your child’s school will adequately educate your child about the proper way to write a check, endorse a check or balance a check register. Today’s electronic banking can provide both challenges and benefits. Most banks will allow you to open both a teen savings and checking account, and link the two together to provide overdraft protection for the checking account. A great feature for student’s learning the financial ropes!

ELECTRONIC BANKING – FRIEND AND FOE

Today’s electronic banking offers many benefits but also presents some challenges.

Some benefits of electronic banking for you and your child include:

  • The ability to monitor your child’s transactions online at any time.
  • The ability to quickly and routinely transfer money to your child’s account.
  • The ability to set daily spending limits.
  • Very little money required to open and maintain an account.
  • Email or text alerts for account balance, overdraft or spending limits.
  • Having an ATM/Bank card in their own name is exciting for most teens and stimulates an interest in learning more about banking and financial matters.

Some challenges to electronic banking are:

  • Lack of practice and infrequent use of manual transactions such as writing checks, filling out deposit slips and ensuring proper use of endorsements.
  • Keeping accurate records when using ATM/Debit cards. Failure to record transactions from card usage.
  • Relying on computer access to check account balances. Not maintaining a hard copy.
  • Relying on computer access to check account balances. Never learning to reconcile an account to a monthly statement.

A GREAT OPPORTUNITY TO TALK WITH YOUR CHILD

Recently my high school aged daughter was presented with a check for some work she had done. We helped her deposit the check but unfortunately, it bounced. She had a sufficient balance in her account and had not written any checks against the funds she was depositing, but this provided a great opportunity to review with her, the process by which a paper check clears the bank and becomes funds “in good order”. We reviewed, once again, that had she written checks against the deposit, she would have been responsible for any NSF fees incurred, even though it was not her fault the check supporting the deposit bounced. Luckily this was a painless event, but did prove to be a great opportunity to “talk” with an otherwise preoccupied high school student.

DOES YOUR CHILD KNOW THE ONLY TWO WAYS TO MAKE MONEY?

Any challenges presented by electronic/online banking can be easily overcome with good communication. We need to take every opportunity to teach our children positive and accurate financial lessons. Our public school system is totally inadequate in this regard. If you child is reasonably responsible, consider opening a savings and checking account for them. Establish their spending limits and create your electronic notifications. Take time each month to help your child balance their account. You will be doing your child a great service (they may not recognize this for many years to come) and you might even be surprised how interested your child is in talking with you about this.