Whether your approach centers on doing it as well as you have or on not to making the same mistakes you did, you have to teach them about money and finances. Part of that is discussing specific products offered by financial institutions: savings accounts, checking accounts, debit cards, credit cards and beyond.
Your child probably already has a savings account (she does, doesn't she?) -- preferably one contributed to regularly and very irregularly accessed (if at all). If your child doesn't, there's no time like the present. Establishing good savings habits early has long-term benefits; have your child put at least a portion of allowance and cash birthday gifts (and job earnings) into savings to get in the saving habit.
While simple savings accounts aren't known for accruing significant interest, what little they do accrue can be an incentive to save and establish savings goals. Knowing that he puts in a certain amount that grows over time can really spur your child to save more.
A first checking account is a big deal. And while writing actual checks is becoming less and less common with the increase in online banking and use of debit cards (in lieu of checks), it's still usually a checking account that one opens to access those online services. And learning about writing checks and managing a bank balance is still necessary and important.
A good time to help your child open her first checking account is when she lands her first formal job. Together, you can research local banks and the kinds of accounts they offer. Some banks, typically locally owned, offer accounts just for teenagers and those starting out in the financial world. The accounts come with resources to learn about balancing a checkbook, establishing credit and maintaining overall financial health.
You'll probably have to open your child's first checking account with your information, as well, and the two accounts may need to be linked. This can help you supervise as your child learns and head off trouble before it starts. And, if a child is away at college, this makes it a bit easier to transfer funds.
New credit rules put limits on free-flowing credit card offers to teens and college students, but young adults still need to establish credit and learn to use it properly. That's where you come in again. Work with your child to choose a credit card with an appropriate limit and coapply/cosign for it if necessary. This level of oversight -- along with the related conversations about interest rates, budgeting and the like -- are critical to your child's financial future.
No matter what your own relationship with money is like, teaching your kids to work effectively with banking institutions and the products and services they offer is important. There are lessons to be taught at every age, from young child to young adult.?
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