The Importance of Teen Banking

Many adults nowadays are in at least five figures worth of debt. In fact, according to bankrate.com, only 51 percent of American adults have enough emergency savings in their bank account to clear themselves of credit card debt. The importance of teen banking is becoming more critical by the day, and it’s necessary that they’re taught how to manage finances before entering adulthood. If we focus on training kids about the importance of money management now, all American adults should have enough money in their account to clear themselves of credit card debt in the future if need be.

Setting up a youth bank account will educate your child on the importance of money management. When you do this they’ll learn the terminology banks and credit unions use like deposit, equity, insurance, loans, and mortgage which are all words that children should be familiar with before entering adulthood . Many different banks and credit unions such as Chase, Genisys, Bank of America, and Michigan First offer teen programs to get them involved with their own money management in real life situations. They do this by providing newsletters, monthly and quarterly statements, and even different programs which directly deposits allowances for teenagers.

In this instance, it’s also vital that educational institutions around the United States offer the chance for teens to take a personal finance class before graduation. According to the Council for Economic Education, 20 states require high school students to take a personal finance class before they graduate which is low, but still much higher than the amount of states that required it 20 years ago which was one (kudos to you Illinois).

The right teen banking program is crucial because it’s not enough to just open an account and deposit money. It’s also important that teens know the value of credit, and what it means when they go to purchase a house, car, or even taking out a loan. My parents always told me as a teen “It’s important to establish a credit card balance, but not too much of a balance.” I had no idea what that meant at the time and as a result, I didn’t open my first credit card until I was 24. Had I been enrolled in the right teen banking program or taken a personal finance course in high school, I might have made sense of what credit meant sooner which would have much greatly beneficial for my credit score.

According to a survey by Esquire, 56 percent of American adults have less than $1,000 to their name. That percentage is far too high, and if those adults were exposed to resources such as teen banking during their youth, they might not find themselves in the situation they’re in today. If you’re the parent of a teenager, get them involved in personal finance classes, and enrolled in a teen banking club at a bank or credit union near you. They might not like it at first, but once they know of the future benefits - and are exposed to the terrifying fact that half of American adults live paycheck-to-paycheck - they’ll appreciate it.