Smart About Money: Checking Accounts for Kids

A recent article in Kiplinger’s Personal Finance talked about raising kids who are good with money.

One of their key takeaways was that it’s very important to let kids manage money on their own. “Your kids will spend unlimited amounts as long as it’s yours,” Kiplinger’s said. “When their money is on the line, it’s a whole new ball game.”

I think most parents have found that to be true. And they can remember back to having that exact experience with their own parents.

When it comes to managing money and spending money, checking accounts have become an amazingly flexible and practical tool. Once totally paper-based — checks in a checkbook, a check register, a paper statement — today’s checking accounts have all kinds of new options that let everyone customize their experience.

Some people are totally online — never actually writing a check and even using their smart phones as debit cards. Others prefer some mix of old and new. Some find the traditional way works best for them.

It’s fantastic that technology makes that kind of personalization possible in a way that simply wasn’t available as little as 10 years ago. But successfully managing a checking account is a skill that has to be learned. The new options make it a little more complicated.

Which is why many community banks have started to offer free checking accounts for young adults. (Canton Co-operative Bank offers one called Connections Checking.)

The idea came from bankers’ own experiences as young people and from many, many comments we hear from customers who say, “No one ever taught me how to use a checking account” or “I wish I had learned this in school.” And that was before online/mobile banking, Direct Deposit of paychecks, and e-statements.

Most of these free young adult checking accounts work pretty much the same way. The young person gets the same checking account as an adult, with checks, an ATM/debit card, access to online/mobile banking, the works — usually with lower fees or no fees. The kid and a parent or guardian are co-owners of the account.

It’s not a one-semester checking account project with “pretend” money. It’s not a video game. It’s a real bank account with their real money.

And since it’s a real checking account with all the bells and whistles, the young adult gets to try out the various options and see which ones they like best. They get to have successes. They get to make mistakes — with trusted adults right there to offer advice. (And the banks offering these accounts tend to be very happy to be of assistance to their young adult customers as well.)

As co-owner of the account, the parent/guardian has the option to monitor it as closely as they like, to set low-balance alerts and transfer money in from their own accounts on a schedule or as needed. It’s a nice way to stay connected as the young person transitions from high school to college and beyond.

Years ago, the father of a gentleman I know taught him a neat technique for painlessly building a cushion in his checking account. (Rounding up in the check register.) He still uses that idea, still benefits from it and remembers his father most fondly.

Sharing ideas, figuring out what works, learning to avoid what doesn’t work — a free young adult checking account lets you give a young person in your life the opportunity to experience those things. And more. You may find it’s a gift for both of you.

Nick Maffeo is the president and CEO of Canton Co-operative Bank in Canton. Have a question? Email to submissions@thecantoncitizen.com.

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